SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM S-3
AMENDMENT
NO. 1
Registration
Statement Under
THE
SECURITIES ACT OF 1933
CEL-SCI CORPORATION
(Exact
name of registrant as specified in charter)
|
Colorado
|
|
(State
or other jurisdiction of incorporation)
|
|
84-09l6344
|
|
8229
Boone Blvd. #802
Vienna,
Virginia 22182
(703)
506-9460
|
|
(IRS
Employer I.D. Number)
|
|
(Address,
including zip code, and telephone number including area of
principal executive offices)
|
|
Geert
Kersten
8229
Boone Blvd. #802
Vienna,
Virginia 22182
(703)
506-9460
|
|
(Name
and address, including zip code, and telephone
number, including area code, of agent for
service)
|
Copies
of all communications, including all communications
sent
to the
agent for service, should be sent to:
William
T. Hart, Esq.
Hart
& Hart
1624
Washington Street
Denver,
Colorado 80203
(303)
839-0061
APPROXIMATE
DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From
time to time after this Registration Statement
becomes
effective as determined by market conditions
If the
only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check
the following box. [ ]
If any
of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in
connection with dividend or interest reinvestment plans, check the
following box. [X]
If this
Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement
number of the earlier effective registration for the same
offering. [ ]
If this
Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier
effective registration statement for the same offering. [
]
If this
Form is a registration statement pursuant to General Instruction
I.D. or a post-effective amendment thereto that shall become
effective upon filing with the Commission pursuant to Rule 462(e)
under the Securities Act, check the following box. [
]
If this
Form is a post-effective amendment to a registration statement
filed pursuant to General Instruction I.D. filed to register
additional securities or additional classes of securities pursuant
to Rule 413(b) under the Securities Act, check the following
box. [ ]
Indicate
by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the
definitions of “large accelerated filer”,
“accelerated filer” and “smaller reporting
company” in Rule 12b-2 of the Exchange Act.
|
Large accelerated filer
|
☐
|
Accelerated filer
|
☐
|
|
Non-accelerated
filer
|
☐
|
Smaller reporting company
|
☒
|
|
(Do not
check if a smaller reporting company)
|
Emerging
growth company
|
☐
|
|
If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 7(a)(2)(B) of Securities
Act
CALCULATION OF REGISTRATION FEE
|
Title of each
Class of Securities to
be Registered
|
Amount of
Securities to be Registered
|
Proposed
Maximum Offering Price
|
Proposed
Maximum Aggregate Offering Price
|
Amount of
Registration Fee (1)
|
|
|
(2)
|
(2)
|
(2)
|
(2)
|
|
Common stock,
preferred stock, convertible preferred stock, rights, and warrants,
including units consisting of one or more of the foregoing
securities, as well as any of these securities issuable upon the
exercise of warrants
|
-
|
-
|
$100,000,000
|
$12,450
|
(1)
The amount of
registration fee, calculated in accordance with Rule 457(o), is the
maximum aggregate offering price at which the securities subject to
this Registration Statement are proposed to be
offered.
(2)
There are being
registered hereunder an indeterminate amount and number of
securities as may be sold, from time to time, by the
Company.
The
Company hereby amends this Registration statement on such date
or dates as may be necessary to delay its effective date until the
registrant shall file a further amendment which specifically states
that this Registration Statement shall thereafter become
effective in accordance with Section 8(a) of
the Securities Act of l933 or until
the Registration Statement shall become effective on
such date as the Commission, acting pursuant to said Section
8(a), may determine.
PROSPECTUS
CEL-SCI CORPORATION
Common Stock
CEL-SCI
Corporation may offer from time to time shares of common stock,
preferred stock, convertible preferred stock, rights, warrants,
units consisting of one or more of these securities, as well as any
of these securities
issuable upon the exercise of warrants, at an initial offering price not
to exceed $100,000,000, at prices and on terms to be determined at
or prior to the time of sale in light of market conditions at the
time of sale.
Specific terms
pertaining to the securities offered by this prospectus will be set
forth in one or more accompanying prospectus supplements, together
with the terms of the offering and the initial price and the net
proceeds to CEL-SCI from the sale. The prospectus
supplement will set forth, without limitation, the terms of the
offering and sale of such securities.
CEL-SCI
may sell the securities offered by this prospectus directly,
through agents designated from time to time, or through
underwriters or dealers. If any agents of CEL-SCI or any
underwriters or dealers are involved in the sale of the securities,
the names of the agents, underwriters or dealers, any applicable
commissions and discounts, and the net proceeds to CEL-SCI will be
set forth in the applicable prospectus supplement.
CEL-SCI
may not use this prospectus to complete sales of its securities
unless this prospectus is accompanied by a prospectus
supplement.
The
securities offered by this prospectus are speculative and involve a
high degree of risk and should be purchased only by persons who can
afford to lose their entire investment. For a
description of certain important factors that should be considered
by prospective investors, see "Risk Factors" beginning on page 16
of this prospectus.
Neither
the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or has
passed upon the accuracy or adequacy of this
prospectus. Any representation to the contrary is a
criminal offense.
CEL-SCI's common
stock is traded on the NYSE American under the symbol
“CVM”. On August
16, 2018 the closing price of CEL-SCI’s common
stock on the NYSE American was $0.98.
The
date of this Prospectus is ________, 2018
1
PROSPECTUS SUMMARY
THIS SUMMARY IS QUALIFIED BY THE OTHER INFORMATION APPEARING
ELSEWHERE IN THIS PROSPECTUS.
CEL-SCI
is focused on finding the best way to activate the immune system to
fight cancer and infectious diseases. Its lead investigational
therapy Multikine® (Leukocyte Interleukin, Injection) is
currently in a pivotal Phase 3 clinical trial involving head and
neck cancer, for which CEL-SCI has received Orphan Drug Status from
the U.S. FDA. The study was fully enrolled with 928 patients in
September 2016. Currently the Company is waiting for the occurrence
of 298 events (deaths) in the two main groups to determine final
results. If the primary endpoint of this global study is achieved,
the results will be used to support applications to regulatory
agencies around the world for worldwide commercial marketing
approvals as a first line cancer therapy.
CEL-SCI’s
immune therapy, Multikine, is being used in a different way than
immune therapy is usually used. It is given before any other
therapy has been administered because that is when the immune
system is thought to be strongest. It is also administered locally
to treat tumors or infections. For example, in the Phase 3 clinical
trial, Multikine is given locally at the site of the tumor as a
first line treatment before surgery, radiation and/or chemotherapy.
The goal is to help the intact immune system kill the micro
metastases that usually cause recurrence of the cancer. In short,
CEL-SCI believes that local administration and administration
before weakening of the immune system by chemotherapy and radiation
will result in higher efficacy with less or no
toxicity.
CEL-SCI
is also investigating a different peptide-based immunotherapy
(LEAPS-H1N1-DC) as a possible treatment for H1N1 hospitalized
patients and as a vaccine (CEL-2000 and CEL-4000) for Rheumatoid
Arthritis (currently in preclinical testing) using its LEAPS
technology platform. CEL-SCI was recently awarded a Phase 2 Small
Business Innovation Research (SBIR) grant in the amount of $1.5
million from the National Institutes of Health (NIH). This grant
will provide funding to allow CEL-SCI to advance its first LEAPS
product candidate, CEL-4000, towards an Investigational New Drug
(IND) application, by funding GMP manufacturing, IND enabling
studies, and additional mechanism of action studies.
CEL-SCI
was formed as a Colorado corporation in 1983. CEL-SCI’s
principal office is located at 8229 Boone Boulevard, Suite 802,
Vienna, VA 22182. CEL-SCI’s telephone number is 703-506-9460
and its website is www.cel-sci.com.
CEL-SCI does not incorporate the information on its website into
this prospectus, and you should not consider it part of this
prospectus.
CEL-SCI
makes its electronic filings with the Securities and Exchange
Commission (SEC), including its annual reports on Form 10-K,
quarterly reports on Form 10-Q, current reports on Form 8-K and
amendments to these reports available on its website free of charge
as soon as practicable after they are filed or furnished to the
SEC.
In this
prospectus, unless otherwise specified or the context requires
otherwise, the terms “CEL-SCI,” the
“Company,” “we,” “us” and
“our” to refer to CEL-SCI Corporation. Our fiscal year
ends on September 30.
2
CEL-SCI’S PRODUCTS
CEL-SCI
is dedicated to research and development directed at improving the
treatment of cancer and other diseases by using the immune system,
the body’s natural defense system. CEL-SCI is currently
focused on the development of the following product candidates and
technologies:
1)
Multikine,
an investigational immunotherapy under development for
the potential treatment of certain head and neck
cancers;
2)
L.E.A.P.S. (Ligand
Epitope Antigen Presentation System) technology, or LEAPS, with two
investigational therapies, LEAPS-H1N1-DC, a product candidate under
development for the potential treatment of pandemic influenza in
hospitalized patients, and CEL-2000 and CEL-4000, vaccine product
candidates under development for the potential treatment of
rheumatoid arthritis.
MULTIKINE
Our
lead investigational therapy, Multikine, is currently being
developed as a potential therapeutic agent directed at using the
immune system to produce an anti-tumor immune response. Data from
Phase 1 and Phase 2 clinical trials suggest that Multikine may help
the immune system “see” the tumor and then attack it,
enabling the body’s own anti-tumor immune response to fight
the tumor. Multikine is the trademark we have registered for this
investigational therapy, and this proprietary name is subject to
review by the U.S. Food and Drug Administration, or FDA, in
connection with our future anticipated regulatory submission for
approval. Multikine has not been licensed or approved for sale,
barter or exchange by the FDA or any other regulatory agency, such
as the European Medicine Agency, or EMA. Neither has its safety or
efficacy been established for any use.
Multikine is an
immunotherapy product candidate comprised of a patented defined
mixture of 14 human natural cytokines and is manufactured in a
proprietary manner in our manufacturing facility. We spent over 10
years and more than $80 million developing and validating the
manufacturing process for Multikine. The pro-inflammatory cytokine
mixture includes interleukins, interferons, chemokines and
colony-stimulating factors, which contain elements of the
body’s natural mix of defenses against cancer.
Multikine is
designed to be used in a different way than immune therapy is
generally being used. Generally immunotherapy is given to patients
who have already failed other treatments of such as surgery,
radiation and/or chemotherapy and most of the time it is
administered systemically. Multikine on the other hand is
administered locally to treat tumors and their microenvironment
before any other therapy has been administered because it is
believed that is the time when the immune system is thought to be
most amenable to activation against the tumor. For example, in the
Phase 3 clinical trial, Multikine is injected locally at the site
of the tumor and near the adjacent draining lymph nodes as a first
line of treatment before surgery, radiation and/or chemotherapy
because that is when the immune system is thought to be strongest.
The goal is to help the intact immune system recognize and kill the
tumor micro metastases that usually cause recurrence of the cancer.
In short, CEL-SCI believes that the local administration and
administration of Multikine and its administration before weakening
of the immune system by chemotherapy and radiation will result in
better anti-tumor response than if Multikine were administered as a
second- or later-line therapy. In clinical studies of Multikine,
administration of the investigational therapy to head and neck
cancer patients has demonstrated the potential for lesser or no
appreciable toxicity.
3
Source: Adapted from Timar et al., Journal of Clinical Oncology
23(15) May 20, 2005
The
first indication CEL-SCI is pursuing for its investigational drug
product candidate Multikine is an indication for the neoadjuvant
therapy in patients with squamous cell carcinoma of the head and
neck, or SCCHN (hereafter also referred to as advanced primary head
and neck cancer).
SCCHN
is a type of head and neck cancer, and CEL-SCI believes that, in
the aggregate, there is a large, unmet medical need among head and
neck cancer patients. CEL-SCI believes the last FDA approval of a
therapy indicated for the treatment of advanced primary head and
neck cancer was over 50 years ago. In the aggregate, head and neck
cancer represents about 6% of the world’s cancer cases, with
approximately over 650,000 patients diagnosed worldwide each year,
and nearly 60,000 patients diagnosed annually in the United States.
Multikine investigational immunotherapy was granted Orphan Drug
designation for neoadjuvant therapy in patients with SCCHN by the
FDA in the United States.
This
trial is currently primarily under the management of two clinical
research organizations, or CROs: ICON Inc. or ICON, and Ergomed
Clinical Research Limited, or Ergomed.
The
Phase 3 study was designed with the objective that, if the study
endpoint, which is an improvement in overall survival of the
subjects treated with the Multikine treatment regimen plus the
current standard of care (SOC) as compared to subjects treated with
the current SOC only, is satisfied, the study results are expected
to be used to support applications that we plan to submit to
regulatory agencies in order to seek commercial marketing approvals
for Multikine in major markets around the world. This assessment
can only be made when a certain number of deaths have occurred in
these two main comparator groups of the study.
The
primary endpoint for the protocol for this Phase 3 head and neck
cancer study required that a 10% increase in overall survival be
obtained in the Multikine group which also is administered CIZ (CIZ
= low dose (non-chemotherapeutic) of cyclophosphamide, indomethacin
and Zinc-multivitamins) all of which are thought to enhance
Multikine activity), plus Standard of Care (Surgery + Radiotherapy
or Chemoradiotherapy) arm of the study over the Control comparator
(Standard of Care alone) arm. As the study was designed, the final
determination of whether this endpoint had been successfully
reached could only be determined when 298 events (deaths) had
occurred in the combined comparator arms of the study.
4
Nine
hundred twenty-eight (928) newly diagnosed head and neck cancer
patients have been enrolled in this Phase 3 cancer study and all
the patients who have completed treatment continue to be followed
for protocol-specific outcomes in accordance with the Study
Protocol. The last patient was enrolled in the study in September
2016. Approximately 135 patients were enrolled in the study from
2011 to 2013, about 195 were enrolled in 2014, about 340 in 2015,
and about 260 in 2016. The study protocol assumed an overall
survival rate of about 55% at 3 years for the SOC treatment group
alone. At this point in the study the 928 patients enrolled in the
study are being followed-up as required by the study
protocol.
Since
CEL-SCI launched its Phase 3 clinical trial for Multikine, CEL-SCI
has incurred expenses of approximately $48.7 million as of March
31, 2018 on direct costs for the Phase 3 clinical trial. CEL-SCI
estimates it will incur additional expenses of approximately $10.5
million for the remainder of the Phase 3 clinical trial. It should
be noted that this estimate is based only on the information
currently available in CEL-SCI’s contracts with the Clinical
Research Organizations responsible for managing the Phase 3
clinical trial and does not include other related costs, e.g., the
manufacturing of the drug. This number may be affected by the rate
of death accumulation in the study, foreign currency exchange
rates, and many other factors, some of which cannot be foreseen
today. It is therefore possible that the cost of the Phase 3
clinical trial will be higher than currently
estimated.
On
August 10, 2017, we received a letter from the U.S. Food and Drug
Administration (FDA) stating that the clinical hold that had been
imposed on our Phase 3 cancer study with Multikine has been removed
and that all clinical trial activities under this Investigational
New Drug application (IND) may resume.
Ultimately, the
decision as to whether CEL-SCI’s drug product candidate is
safe and effective can only be made by FDA and/or by other
regulatory authorities based upon an assessment of all of the data
from an entire drug development program submitted as part of an
application for marketing approval. As detailed elsewhere in this
prospectus supplement the current Phase 3 clinical study for
CEL-SCI’s investigational drug may or may not be able to be
used as the pivotal study supporting a marketing application in the
United States, and, if not, at least one entirely new Phase 3
pivotal study would need to be conducted to support a marketing
application in the United States.
LEAPS
Our
patented T-cell Modulation Process, referred to as LEAPS (Ligand
Epitope Antigen Presentation System), uses
“heteroconjugates” to direct the body to choose a
specific immune response. LEAPS is designed to stimulate the human
immune system to more effectively fight bacterial, viral and
parasitic infections as well as autoimmune, allergies,
transplantation rejection and cancer, when it cannot do so on its
own. Administered like a vaccine, LEAPS combines T-cell binding
ligands with small, disease-associated peptide antigens, and may
provide a new method to treat and prevent certain
diseases.
The
ability to generate a specific immune response is important because
many diseases are often not combated effectively due to the
body’s selection of the “inappropriate” immune
response. The capability to specifically reprogram an immune
response may offer a more effective approach than existing vaccines
and drugs in attacking an underlying disease.
On
September 19, 2017, CEL-SCI announced that it has been awarded a
Phase 2 Small Business Innovation Research (SBIR) grant in the
amount of $1.5 million from the National Institute of Arthritis
Muscoskeletal and Skin Diseases, which is part of the National
Institutes of Health (NIH). This grant will provide funding to
allow CEL-SCI to advance its first LEAPS product candidate,
CEL-4000, towards an Investigational New Drug (IND) application, by
funding GMP manufacturing, IND enabling studies, and additional
mechanism of action studies. The work is being conducted at
CEL-SCI’s research laboratory and Rush University Medical
Center in Chicago, Illinois in the laboratories of Tibor Glant, MD,
Ph.D., The Jorge O. Galante Professor of Orthopedic Surgery and
Katalin Mikecz, MD, Ph.D. Professor of Orthopedic Surgery &
Biochemistry. The grant was awarded based on published data
described below by Dr. Glant's team in collaboration with CEL-SCI
showing that the administration of a proprietary peptide using
CEL-SCI's LEAPS technology prevented the development, and lessened
the severity, including inflammation, of experimental proteoglycan
induced arthritis (PGIA or GIA) when it was administered after the
disease was induced in the animals.
5
In July
2014, CEL-SCI announced that it has been awarded a Phase 1 Small
Business Innovation Research (SBIR) grant in the amount of $225,000
from the National Institute of Arthritis Muscoskeletal and Skin
Diseases, which is part of the National Institutes of Health. The
grant funded the development of CEL-SCI’s LEAPS technology as
a potential treatment for rheumatoid arthritis, an autoimmune
disease of the joints. The work was conducted at Rush University
Medical Center in Chicago, Illinois in the laboratories of Tibor
Glant, MD, Ph.D., The Jorge O. Galante Professor of Orthopedic
Surgery; Katalin Mikecz, MD, Ph.D. Professor of Orthopedic Surgery
& Biochemistry; and Allison Finnegan, Ph.D. Professor of
Medicine.
With
the support of the SBIR grant, CEL-SCI is developing two new drug
candidates, CEL-2000 and CEL-4000, as potential rheumatoid
arthritis therapeutic vaccines. The data from animal studies using
the CEL-2000 treatment vaccine demonstrated that it could be used
as an effective treatment against rheumatoid arthritis with fewer
administrations than those required by other anti-rheumatoid
arthritis treatments currently on the market for arthritic
conditions associated with the Th17 signature cytokine TNF-a. The
data for CEL-4000 indicates it could be effective against
rheumatoid arthritis cases where a Th1 signature cytokine (IFN-c)
is dominant. CEL-2000 and CEL-4000 have the potential to be a more
disease-specific therapy, significantly less expensive, act at an
earlier step in the disease process than current therapies and may
be useful in patients not responding to existing rheumatoid
arthritis therapies. CEL-SCI believes this represents a large unmet
medical need in the rheumatoid arthritis market.
In
February 2017 and November 2016, CEL-SCI announced new preclinical
data that demonstrate its investigational new drug candidate
CEL-4000 has the potential for use as a therapeutic vaccine to
treat rheumatoid arthritis. This efficacy study was supported in
part by the SBIR Phase I Grant and was conducted in collaboration
with Drs. Katalin Mikecz and Tibor Glant, and their research team
at Rush University Medical Center in Chicago, IL.
In
March 2015, CEL-SCI and its collaborators published a review
article on vaccine therapies for rheumatoid arthritis based in part
on work supported by the SBIR grant. The article is entitled
“Rheumatoid arthritis vaccine therapies: perspectives and
lessons from therapeutic Ligand Epitope Antigen Presentation System
vaccines for models of rheumatoid arthritis” and was
published in Expert Rev. Vaccines 1 - 18 and can be found at
http://www.ncbi.nlm.nih.gov/ pubmed/25787143.
In
August 2012, Dr. Zimmerman, CEL-SCI’s Senior Vice President
of Research, Cellular Immunology, gave a Keynote presentation at
the OMICS 2nd International Conference on Vaccines and Vaccinations
in Chicago. This presentation showed how the LEAPS peptides
administered altered only select cytokines specific for each
disease model, thereby improving the status of the test animals and
even preventing death and morbidity. These results support the
growing body of evidence that provides for its mode of action by a
common format in these unrelated conditions by regulation of Th1
(e.g., IL12 and IFN-c) and their action on reducing TNF-a and other
inflammatory cytokines as well as regulation of antibodies to these
disease associated antigens. This was also illustrated by a
schematic model showing how these pathways interact and result in
the overall effect of protection and regulation of cytokines in a
beneficial manner.
Using
the LEAPS technology, CEL-SCI has created a potential peptide
treatment for H1N1 (swine flu) hospitalized patients. This LEAPS
flu treatment is designed to focus on the conserved, non-changing
epitopes of the different strains of Type A Influenza viruses
(H1N1, H5N1, H3N1, etc.), including “swine”,
“avian or bird”, and “Spanish Influenza”,
in order to minimize the chance of viral “escape by
mutations” from immune recognition. Therefore one should
think of this treatment not really as an H1N1 treatment, but as a
potential pandemic flu treatment. CEL-SCI’s LEAPS flu
treatment contains epitopes known to be associated with immune
protection against influenza in animal models.
6
Additional work on
this treatment for the pandemic flu is being pursued in
collaboration with the National Institute of Allergy and Infectious
Diseases (NIAID), part of the National Institutes of Health, USA.
In May 2011 NIAID scientists presented data at the Keystone
Conference on “Pathogenesis of Influenza: Virus-Host
Interactions” in Hong Kong, China, showing the positive
results of efficacy studies in mice of LEAPS H1N1 activated
dendritic cells (DCs) to treat the H1N1 virus. Scientists at the
NIAID found that H1N1-infected mice treated with LEAPS-H1N1 DCs
showed a survival advantage over mice treated with control DCs. The
work was performed in collaboration with scientists led by Kanta
Subbarao, M.D., Chief of the Emerging Respiratory Diseases Section
in NIAID’s Division of Intramural Research, part of the
National Institutes of Health, USA.
In July
2013, CEL-SCI announced the publication of the results of influenza
studies by researchers from the NIAID in the Journal of Clinical
Investigation (www.jci.org/articles/view/67550). The studies
described in the publication show that when CEL-SCI’s
investigational J-LEAPS Influenza Virus treatments were used
“in vitro” to activate DCs, these activated DCs, when
injected into influenza infected mice, arrested the progression of
lethal influenza virus infection in these mice. The work was
performed in the laboratory of Dr. Subbarao.
Even
though the various LEAPS drug candidates have not yet been given to
humans, they have been tested in vitro with human cells. They have
induced similar cytokine responses that were seen in these animal
models, which may indicate that the LEAPS technology might
translate to humans. The LEAPS candidates have demonstrated
protection against lethal herpes simplex virus (HSV1) and H1N1
influenza infection, as a prophylactic or therapeutic agent in
animals. They have also shown some level of efficacy in animals in
two autoimmune conditions, curtailing and sometimes preventing
disease progression in arthritis and myocarditis animal models.
CEL-SCI’s belief is that the LEAPS technology may be a
significant alternative to the vaccines currently available on the
market for these diseases.
None of
the LEAPS investigational products have been approved for sale,
barter or exchange by the FDA or any other regulatory agency for
any use to treat disease in animals or humans. The safety or
efficacy of these products has not been established for any use.
Lastly, no definitive conclusions can be drawn from the
early-phase, preclinical-trials data involving these
investigational products. Before obtaining marketing approval from
the FDA in the United States, and by comparable agencies in most
foreign countries, these product candidates must undergo rigorous
preclinical and clinical testing which is costly and time consuming
and subject to unanticipated delays. There can be no assurance that
these approvals will be granted.
MANUFACTURING FACILITY
Before
starting the Phase 3 clinical trial, for reasons related to
regulatory considerations, CEL-SCI needed to build a dedicated
manufacturing facility to produce Multikine. This facility has been
completed and validated, and has produced multiple clinical lots
for the Phase 3 clinical trial. The facility has also passed review
by a European Union Qualified Person on several
occasions.
CEL-SCI’s
lease on the manufacturing facility expires on October 31, 2028.
CEL-SCI completed validation of its new manufacturing facility in
January 2010. The state-of-the-art facility is being used to
manufacture Multikine for CEL-SCI’s Phase 3 clinical trial.
In addition to using this facility to manufacture Multikine,
CEL-SCI, only if the facility is not being used for Multikine, may
offer the use of the facility as a service to pharmaceutical
companies and others, particularly those that need to “fill
and finish” their drugs in a cold environment (4 degrees
Celsius, or approximately 39 degrees Fahrenheit). Fill and finish
is the process of filling injectable drugs in a sterile manner and
is a key part of the manufacturing process for many medicines.
However, priority will always be given to Multikine as management
considers the Multikine supply to the clinical studies and
preparation for a final marketing approval to be more important
than offering fill and finish services.
7
ARBITRATION
On
October 31, 2013, we commenced arbitration proceedings against
inVentiv Health Clinical, LLC, or inVentiv, our former clinical
research organization (CRO), and now part of Syneos Health. The
arbitration claim, initiated under the Commercial Rules of the
American Arbitration Association, alleges (i) breach of contract,
(ii) fraud in the inducement, and (iii) common law fraud. On June
25, 2018, the arbitrator ruled that inVentiv materially breached
its contract with CEL-SCI and denied inVentiv all but one of its
counterclaims ($429,649 for certain unpaid invoices) against
CEL-SCI. He awarded CEL-SCI $2,917,834 in damages. This is a final
and binding decision and to CEL-SCI’s knowledge, marks the
first ever decision in favor of a pharmaceutical/biomedical company
against a CRO for breach of contract. However, pursuant to the
terms of an agreement with an affiliate of Lake Whillans Litigation
Finance, LLC, a firm that produced partial funding for the legal
expenses incurred by us in the arbitration proceedings, all amounts
received from inVentiv by virtue of the arbitration award will be
paid to Lake Whillans Litigation Finance.
The
arbitration and its findings are subject to certain confidentiality
requirements and CEL-SCI is able to disclose only certain
information at this time. Most importantly, the arbitrator
concluded as follows:
●
The arbitrator
found that inVentiv materially breached its contract with
CEL-SCI;
●
The arbitrator
found that inVentiv knowingly misled CEL-SCI with respect to
“enrollment projections,” which, in the
arbitrator’s opinion, was “fraudulent,” but the
arbitrator denied CEL-SCI’s fraud claim as a result of
certain legal “roadblocks”;
●
The arbitrator
assessed inVentiv for the entirety of the arbitrator’s fees
for the arbitration as a result of inVentiv’s “scorched
earth litigation tactics”; and
●
The arbitrator
denied all but one of inVentiv’s counterclaims against
CEL-SCI.
THE OFFERING
Securities
Offered:
CEL-SCI
may offer from time to time shares of common stock, preferred
stock, convertible
preferred stock rights, warrants, units consisting of one or more
of the foregoing securities, as well as any of these securities
issuable upon the exercise of the warrants, at an initial offering
price not to exceed $100,000,000, at prices and on terms to be
determined at or prior to the time of sale in light of market
conditions at the time of sale. CEL-SCI may not use this
prospectus to complete sales of its securities unless this
prospectus is accompanied by a prospectus
supplement. See the “Plan of Distribution”
section of this prospectus for additional information concerning
the manner in which CEL-SCI’s securities may be
offered.
|
Common
Stock Outstanding:
|
|
As of
August 17, 2018 CEL-SCI had 24,021,058
outstanding shares of common stock. The number of
outstanding shares does not give effect to shares which may be
issued upon the exercise and/or conversion of options, warrants or
other convertible securities. See "Comparative Share
Data" for more information.
|
|
|
|
|
|
Risk
Factors:
|
|
The
purchase of the securities offered by this prospectus involves a
high degree of risk. Risk factors include the lack of
revenues and history of loss, need for additional capital and need
for FDA approval. See the “Risk Factors" section
of this prospectus for additional Risk Factors.
|
|
|
|
|
|
Common
Stock
NYSE
American symbol:
|
|
CVM
|
|
|
|
|
8
FORWARD LOOKING STATEMENTS
This
prospectus and the documents that are incorporated or deemed to be
incorporated by reference into this prospectus, contain or
incorporate by reference “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act
of 1995, Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. You
can generally identify these forward-looking statements by
forward-looking words such as “anticipates,”
“believes,” “expects,”
“intends,” “future,” “could,”
“estimates,” “plans,” “would,”
“should,” “potential,”
“continues” and similar words or expressions (as well
as other words or expressions referencing future events, conditions
or circumstances). These forward-looking statements involve risks,
uncertainties and other important factors that may cause our actual
results, performance or achievements to be materially different
from any future results, performance or achievements expressed or
implied by such forward-looking statements, including, but not
limited to:
●
the progress and
timing of, and the amount of expenses associated with, our
research, development and commercialization activities for our
product candidates, including Multikine;
●
our expectations
regarding the timing, costs and outcome of any pending or future
litigation matters, lawsuits or arbitration proceedings, including
but not limited to the pending arbitration proceeding we initiated
against our former clinical research organization, or
CRO;
●
the success of our
clinical studies for our product candidates;
●
our ability to
obtain U.S. and foreign regulatory approval for our product
candidates and the ability of our product candidates to meet
existing or future regulatory standards;
●
our expectations
regarding federal, state and foreign regulatory
requirements;
●
the therapeutic
benefits and effectiveness of our product candidates;
●
the safety profile
and related adverse events of our product candidates;
●
our ability to
manufacture sufficient amounts of Multikine or our other product
candidates for use in our clinical studies or, if approved, for
commercialization activities following such regulatory
approvals;
●
our plans with
respect to collaborations and licenses related to the development,
manufacture or sale of our product candidates;
●
our expectations as
to future financial performance, expense levels and liquidity
sources;
●
our ability to
compete with other companies that are or may be developing or
selling products that are competitive with our product
candidates;
●
anticipated trends
and challenges in our potential markets;
●
our ability to
attract, retain and motivate key personnel;
●
our ability to
continue as a going concern; and
●
our
liquidity.
All
forward-looking statements contained herein are expressly qualified
in their entirety by this cautionary statement, the risk factors
set forth under the heading “Risk Factors” and
elsewhere in this prospectus and in the documents incorporated or
deemed to be incorporated by reference into this prospectus. The
forward-looking statements contained in this prospectus and any
document incorporated or deemed to be incorporated by reference in
this prospectus, speak only as of their respective
dates. Except to the extent required by applicable laws
and regulations, we undertake no obligation to update these
forward-looking statements to reflect new information, events or
circumstances after the date of this prospectus or to reflect the occurrence of
unanticipated events. In light of these risks and uncertainties,
the forward-looking events and circumstances described in this
prospectus and the documents that are incorporated by reference
into this prospectus supplement and the accompanying prospectus may
not occur and actual results could differ materially from those
anticipated or implied in such forward-looking statements.
Accordingly, you are cautioned not to place undue reliance on these
forward-looking statements.
9
RISK FACTORS
Investors should be
aware that this offering involves the risks described below, which
could adversely affect the price of CEL-SCI’s common
stock. In addition to the other information contained in
this prospectus, the following factors should be considered
carefully in evaluating an investment in the securities offered by
this prospectus. The risks and uncertainties we
described are not the only ones facing us. Additional
risks not presently known to us, or that we currently deem
immaterial, may also impair our business operations. If
any of these risks were to occur, our business, financial
condition, result of operations and liquidity would likely
suffer. In that event, the trading price of our common
stock would decline, and you could lose all or part of your
investment. Some statements in this Prospectus,
including statements in the following risk factors, constitute
forward-looking statements. See “Forward-Looking
Statements.”
Risks Related to CEL-SCI
CEL-SCI has identified material weaknesses in its internal control
over financial reporting which could, if not remediated, result in
material misstatements in CEL-SCI’s financial
statements.
CEL-SCI’s
management is responsible for establishing and maintaining adequate
internal control over its financial reporting, as defined in Rule
13a-15(f) under the Exchange Act. CEL-SCI’s management
identified material weaknesses in the internal control over
financial reporting as of September 30, 2016. A material weakness
is a deficiency, or a combination of deficiencies, in internal
control over financial reporting, such that there is a reasonable
possibility that a material misstatement of CEL-SCI’s annual
or interim financial statements will not be prevented or detected
on a timely basis.
CEL-SCI
discovered an error in the way it accounted for the lease for its
manufacturing facility. The accounting error was determined to be a
material weakness in CEL-SCI’s internal control over
financial reporting as of September 30, 2016 relating to
CEL-SCI’s financial close process for non-routine
transactions including the accounting for leases and the assessment
of impairment of long-lived assets. The errors were identified
during the course of the preparation of its financial statements
and other financial data for its fiscal year ended September 30,
2017, as well as its assessment of its disclosure controls and
procedures and internal control over financial reporting as of that
date. This resulted in CEL-SCI filing an amended 10-K/A for the
year ended September 30, 2016, that disclosed these material
weaknesses and the impact of the restatement to the previously
issued financial statements. These material weaknesses continue to
exist at September 30, 2017 and CEL-SCI is in the process of
remediating these material weaknesses.
If the
remedial measures CEL-SCI has begun implementing that are designed
to address these material weaknesses are insufficient to address
these material weaknesses, or if additional material weaknesses or
significant deficiencies in CEL-SCI’s internal control are
discovered or occur in the future, the financial statements may
contain material misstatements and CEL-SCI could be required to
restate its financial results.
We have incurred significant losses since inception, and we
anticipate that we will continue to incur significant losses for
the foreseeable future and may never achieve or maintain
profitability.
We have
a history of net losses, expect to incur substantial losses and
have negative operating cash flow for the foreseeable future, and
may never achieve or maintain profitability. Since the date of our
formation and through June 30, 2018, we incurred net
losses of approximately $317 million. We have relied
principally upon the proceeds from the public and private sales of
our securities to finance our activities to date. To date, we have
not commercialized any products or generated any revenue from the
sale of products, and we do not expect to generate any product
revenue for the foreseeable future. We do not know whether or when
we will generate product revenue or become profitable.
10
We are
heavily dependent on the success of Multikine which is under
clinical development. We cannot be certain that Multikine will
receive regulatory approval or be successfully commercialized even
if we receive regulatory approval Multikine is our only product
candidate in late-stage clinical development, and our business
currently depends heavily on its successful development, regulatory
approval and commercialization. We have no drug products for sale
currently and may never be able to develop approved and marketable
drug products.
Even if
we succeed in developing and commercializing one or more of our
product candidates, we expect to continue to incur significant
operating and capital expenditures as we:
●
continue to
undertake preclinical development and clinical trials for product
candidates;
●
seek regulatory
approvals for product candidates; and
●
implement
additional internal systems and infrastructure.
To
become and remain profitable, we must succeed in developing and
commercializing our product candidates, which must generate
significant revenue. This will require us to be successful in a
range of challenging activities, including completing preclinical
testing and clinical trials of our product candidates, discovering
or acquiring additional product candidates, obtaining regulatory
approval for these product candidates and manufacturing, marketing
and selling any products for which we may obtain regulatory
approval. We are only in the preliminary stages of most of these
activities. We may never succeed in these activities and, even if
we do, may never generate revenue that is significant enough to
achieve profitability.
Even if
we do achieve profitability, we may not be able to sustain or
increase profitability on a quarterly or annual basis. Our failure
to become and remain profitable could depress the value of our
company and could impair our ability to raise capital, expand our
business, maintain our research and development efforts, diversify
our product offerings or even continue our operations. A decline in
the value of our company could cause our stockholders to lose all
or part of their investment.
Our Independent Registered Public Accountants have included in
their report on our financial statements a paragraph stating that
we may be unable to continue as a going concern.
As a
result of our recurring losses from operations, our independent
registered public accounting firm, BDO USA, LLP, has issued a
report in connection with their audit of our financial statements
for the year ended September 30, 2017, that included an explanatory
paragraph referring to our recurring losses from operations and
expressing substantial doubt in our ability to continue as a going
concern without additional capital becoming available. The doubt
about our ability to continue as a going concern could have an
adverse impact on our ability to execute our business plan, result
in the reluctance on the part of certain suppliers to do business
with us, or adversely affect our ability to raise additional debt
or equity capital.
We will require substantial additional capital to remain in
operation. A failure to obtain this necessary capital when needed
could force us to delay, limit, reduce or terminate our product
candidates’ development or commercialization
efforts.
As of
June 30, 2018, we had cash and cash equivalents of
approximately $2.3 million. We raised approximately
$5 million subsequent to June 30, 2018.
We believe that we will continue to expend substantial resources
for the foreseeable future developing Multikine, LEAPS and any
other product candidates or technologies that we may develop or
acquire. These expenditures will include costs associated with
research and development, potentially obtaining regulatory
approvals and having our products manufactured, as well as
marketing and selling products approved for sale, if any. In
addition, other unanticipated costs may arise. Because the outcome
of our current and anticipated clinical trials is highly uncertain,
we cannot reasonably estimate the actual amounts necessary to
successfully complete the development and commercialization of our
product candidates.
11
Our
future capital requirements depend on many factors,
including:
●
the rate of
progress of, results of and cost of completing Phase 3 clinical
development of Multikine for the treatment of certain head and neck
cancers;
●
the results of our
applications to and meetings with the FDA, the EMA and other
regulatory authorities and the consequential effect on our
operating costs;
●
assuming favorable
Phase 3 clinical results, the cost, timing and outcome of our
efforts to obtain marketing approval for Multikine in the United
States, Europe and in other jurisdictions, including the
preparation and filing of regulatory submissions for Multikine with
the FDA, the EMA and other regulatory authorities;
●
the scope,
progress, results and costs of additional preclinical, clinical, or
other studies for additional indications for Multikine, LEAPS and
other product candidates and technologies that we may develop or
acquire;
●
the timing of, and
the costs involved in, obtaining regulatory approvals for LEAPS if
clinical studies are successful;
●
the cost and timing
of future commercialization activities for our products, if any of
our product candidates are approved for marketing, including
product manufacturing, marketing, sales and distribution
costs;
●
the revenue, if
any, received from commercial sales of our product candidates for
which we receive marketing approval;
●
the cost of having
our product candidates manufactured for clinical trials and in
preparation for commercialization;
●
our ability to
establish and maintain strategic collaborations, licensing or other
arrangements and the financial terms of such
agreements;
●
the costs involved
in preparing, filing and prosecuting patent applications and
maintaining, defending and enforcing our intellectual property
rights, including litigation costs, and the outcome of such
litigation; and
●
the extent to which
we acquire or in-license other products or
technologies.
Based
on our current operating plan, and absent any future financings or
strategic partnerships, we believe that our existing cash and cash
equivalents and investments will be sufficient to fund our
projected operating expenses and capital expenditure requirements
into the first quarter of 2019. However, our operating plan may
change as a result of many factors currently unknown to us, and we
may need additional funds sooner than planned. Additional funds may
not be available when we need them on terms that are acceptable to
us, or at all. If adequate funds are not available to us on a
timely basis, we may be required to delay, limit, reduce or
terminate preclinical studies, clinical trials or other development
activities for Multikine, LEAPS, or any other product candidates or
technologies that we develop or acquire, or delay, limit, reduce or
terminate our sales and marketing capabilities or other activities
that may be necessary to commercialize our product candidates.
Due to
recurring losses from operations and future liquidity needs, there
is substantial doubt about our ability to continue as a going
concern without additional capital becoming available. The
doubt about our ability to continue as a going concern could have
an adverse impact on our ability to execute our business plan,
result in the reluctance on the part of certain suppliers to do
business with us, or adversely affect our ability to raise
additional debt or equity capital.
12
The costs of our product candidate development and clinical trials
are difficult to estimate and will be very high for many years,
preventing us from making a profit for the foreseeable future, if
ever.
Clinical and other
studies necessary to obtain approval of a new drug can be time
consuming and costly, especially in the United States, but also in
foreign countries. Our estimates of the costs associated with
future clinical trials and research may be substantially lower than
what we actually experience. It is impossible to predict what we
will face in the development of a product candidate, such as
Multikine. The purpose of clinical trials is to provide both us and
regulatory authorities with safety and efficacy data in humans. It
is relatively common to revise a trial or add subjects to a trial
in progress. The difficult and often complex steps necessary to
obtain regulatory approval, especially that of the FDA, and the
EMA, involve significant costs and may require several years to
complete. We expect that we will need substantial additional
financing over an extended period of time in order to fund the
costs of future clinical trials, related research, and general and
administrative expenses.
The
extent of our clinical trials and research programs are primarily
based upon the amount of capital available to us and the extent to
which we receive regulatory approvals for clinical trials. We have
established estimates of the future costs of the Phase 3 clinical
trial for Multikine, but, as explained above, that estimate may not
prove correct.
An adverse determination in any future legal proceedings could have
a material adverse effect on us.
We may
be the target of claims asserting violations of securities fraud
and derivative actions, or other litigation or arbitration
proceedings in the future. Any future litigation could result in
substantial costs and divert management’s attention and
resources. These legal proceedings may result in large judgments or
settlements against us, any of which could have a material adverse
effect on our business, operating results, financial condition and
liquidity.
Compliance with changing regulations concerning corporate
governance and public disclosure may result in additional
expenses.
Changing laws,
regulations and standards relating to corporate governance and
public disclosure may create uncertainty regarding compliance
matters. New or changed laws, regulations and standards are subject
to varying interpretations in many cases. As a result, their
application in practice may evolve over time. We are committed to
maintaining high standards of corporate governance and public
disclosure. Complying with evolving interpretations of new or
changing legal requirements may cause us to incur higher costs as
we revise current practices, policies and procedures, and may
divert management time and attention from potential
revenue-generating activities to compliance matters. If our efforts
to comply with new or changed laws, regulations and standards
differ from the activities intended by regulatory or governing
bodies due to ambiguities related to practice, our reputation may
also be harmed. Further, our board members, chief executive
officer, and other executive officers could face an increased risk
of personal liability in connection with the performance of their
duties. As a result, we may have difficulty attracting and
retaining qualified board members and executive officers which
could harm our business.
We have not established a definite plan for the marketing of
Multikine, if approved.
We have
not established a definitive plan for marketing nor have we
established a price structure for any of our product candidates, if
approved. However, we intend, if we are in a position to do so, to
sell Multikine ourselves in certain markets where it is approved,
and or to enter into written marketing agreements with various
third parties with established sales forces in such markets. The
sales forces in turn would, we believe, focus on selling Multikine
to targeted cancer centers, physicians and clinics involved in the
treatment of head and neck cancer. We have already licensed future
sales of Multikine, if approved, to three companies: Teva
Pharmaceutical Industries Ltd. in Israel, Turkey, Serbia and
Croatia; Orient Europharma Co., Ltd. in Taiwan, Singapore, Hong
Kong, Malaysia, South Korea, the Philippines, Australia and New
Zealand; and Byron BioPharma, LLC in South Africa. We believe that
these companies will have the resources to market Multikine
appropriately in their respective territories, if approved, but
there is no guarantee that they will. There is no assurance that we
will be able to find qualified third-party partners to market our
product in other areas, on terms that are favorable to us, or at
all.
13
We may
encounter problems, delays and additional expenses in developing
marketing plans with third parties. In addition, even if Multikine,
if approved, is cost-effective and demonstrated to increase overall
patient survival, we may experience other limitations involving the
proposed sale of Multikine, such as uncertainty of third-party
coverage and reimbursement. There is no assurance that we can
successfully market Multikine, if approved, or any other product
candidates we may develop.
We hope to expand our clinical development capabilities in the
future, and any difficulties hiring or retaining key personnel or
managing this growth could disrupt our operations.
We are
highly dependent on the principal members of our management and
development staff. If the Phase 3 Multikine clinical trial is
successful, we expect to expand our clinical development and
manufacturing capabilities, which will involve hiring additional
employees. Future growth will require us to continue to implement
and improve our managerial, operational and financial systems and
to continue to retain, recruit and train additional qualified
personnel, which may impose a strain on our administrative and
operational infrastructure. The competition for qualified personnel
in the biopharmaceutical field is intense. We are highly dependent
on our ability to attract, retain and motivate highly qualified
management and specialized personnel required for clinical
development. Due to our limited resources, we may not be able to
manage effectively the expansion of our operations or recruit and
train additional qualified personnel. If we are unable to retain
key personnel or manage our future growth effectively, we may not
be able to implement our business plan.
If product liability or patient injury lawsuits are brought against
us, we may incur substantial liabilities and may be required to
limit clinical testing or future commercialization of Multikine or
our other product candidates.
We face
an inherent risk of product liability as a result of the clinical
testing of Multikine and other product candidates, and will face an
even greater risk if we commercialize any of our product
candidates. For example, we may be sued if our Multikine or LEAPS
product candidates, or any other future product candidates,
allegedly cause injury or are found to be otherwise unsuitable
during clinical testing, manufacturing or, if approved, marketing
or sale. Any such product liability claims may include allegations
of defects in manufacturing, defects in design, a failure to warn
of dangers inherent in the product candidate, negligence, strict
liability and a breach of warranties. Claims could also be asserted
under state consumer protection acts.
Furthermore,
Multikine is made, in part, from components of human blood. There
are inherent risks associated with products that involve human
blood such as possible contamination with viruses, including
hepatitis or HIV. Any possible contamination could cause injuries
to patients who receive contaminated Multikine, or could require us
to destroy batches of Multikine, thereby subjecting us to possible
financial losses, lawsuits and harm to our business.
If we
cannot successfully defend ourselves against product liability
claims, we may incur substantial liabilities or be required to
limit or cease the clinical testing or commercialization of our
product candidates, if approved. Even a successful defense would
require significant financial and management resources. Regardless
of the merits or eventual outcome, liability claims may result
in:
●
decreased demand
for Multikine or our other product candidates, if
approved;
●
injury to our
reputation;
●
withdrawal of
existing, or failure to enroll additional, clinical trial
participants;
●
costs to defend any
related litigation;
14
●
a diversion of
management’s time and our resources;
●
substantial
monetary awards to trial participants or patients;
●
product candidate
recalls, withdrawals or labeling, marketing or promotional
restrictions;
●
loss of
revenue;
●
inability to
commercialize Multikine or our other product candidates;
and
●
a decline in the
price of our common stock.
Although we have
product liability insurance for Multikine in the amount of $10.0
million, the successful prosecution of a product liability case
against us could have a materially adverse effect upon our business
if the amount of any judgment exceeds our insurance coverage. Any
claim that may be brought against us could result in a court
judgment or settlement in an amount that is not covered, in whole
or in part, by our insurance or that is in excess of the limits of
our insurance coverage. Our insurance policies also have various
exclusions, and we may be subject to a claim for which we have no
coverage. We may have to pay any amounts awarded by a court or
negotiated in a settlement that exceed our coverage limitations or
that are not covered by our insurance, and we may not have, or be
able to obtain, sufficient capital to pay such amounts. We
commenced the Phase 3 clinical trial for Multikine in December
2010. Although no claims have been brought to date, participants in
our clinical trials could bring civil actions against us for any
unanticipated harmful effects allegedly arising from the use of
Multikine or any other product candidate that we may attempt to
develop.
Our commercial success depends, in part, upon attaining significant
market acceptance of our product candidates, if approved, among
physicians, patients, healthcare payors and major operators of
cancer clinics.
Even if
we obtain regulatory approval for our product candidates, any
resulting product may not gain market acceptance among physicians,
healthcare payors, patients and the medical community, which are
critical to commercial success. Market acceptance of any product
candidate for which we receive approval depends on a number of
factors, including:
●
the efficacy and
safety as demonstrated in clinical trials;
●
the timing of
market introduction of such product candidate as well as
competitive products;
●
the clinical
indications for which the drug is approved;
●
the approval,
availability, market acceptance and reimbursement for the companion
diagnostic;
●
acceptance by
physicians, major operators of cancer clinics and patients of the
drug as a safe and effective treatment;
●
the potential and
perceived advantages of such product candidate over alternative
treatments, especially with respect to patient subsets that are
targeted with such product candidate;
●
the safety of such
product candidate seen in a broader patient group, including its
use outside the approved indications;
●
the cost of
treatment in relation to alternative treatments;
●
the availability of
adequate reimbursement and pricing by third-party payors and
government authorities;
●
relative
convenience and ease of administration;
●
the prevalence and
severity of adverse side effects; and
●
the effectiveness
of our sales and marketing efforts.
15
If our
product candidates are approved but fail to achieve an adequate
level of acceptance by physicians, healthcare payors and patients,
we will not be able to generate significant revenues, and we may
not become or remain profitable.
Risks Related to Government Approvals
Our product candidates must undergo rigorous preclinical and
clinical testing and regulatory approvals, which could be costly
and time-consuming and subject us to unanticipated delays or
prevent us from marketing any products.
Our
product candidates are subject to premarket approval from the FDA
in the United States, the EMA in the European Union, and by
comparable agencies in most foreign countries before they can be
sold. Before obtaining marketing approval, these product candidates
must undergo costly and time consuming preclinical and clinical
testing which could subject us to unanticipated delays and may
prevent us from marketing our product candidates. There can be no
assurance that such approvals will be granted on a timely basis, if
at all.
Clinical testing is expensive and can take many
years to complete, and its outcome is inherently uncertain. Failure
can occur at any time during the clinical trial process. The
results of preclinical studies and early clinical trials of
our product candidates may not be
predictive of the results of later-stage clinical trials. A number
of companies in the biopharmaceutical industry have suffered
significant setbacks in advanced clinical trials due to lack of
efficacy or adverse safety profiles, notwithstanding promising
results in earlier trials. Our current and future clinical trials
may not be successful.
Although
we are no longer treating patients and simply following the
patient’s per the protocol of the Phase 3 clinical trial for
Multikine, we may experience delays in our the clinical trial and
we do not know whether the clinical trials need to be redesigned.
Clinical trials can be delayed for a variety of reasons, including
delays related to:
●
the availability of
financial resources needed to commence and complete our planned
trials;
●
obtaining
regulatory approval to commence a trial;
●
reaching agreement
on acceptable terms with prospective contract research
organizations, or CROs, and clinical trial sites, the terms of
which can be subject to extensive negotiation and may vary
significantly among different CROs and trial sites;
●
obtaining
Institutional Review Board, or IRB, approval at each clinical trial
site;
●
recruiting suitable
patients to participate in a trial;
●
having patients
complete a trial or return for post-treatment
follow-up;
●
clinical trial
sites deviating from trial protocol or dropping out of a
trial;
●
adding new clinical
trial sites; or
●
manufacturing
sufficient quantities of our product
candidate for use in clinical trials.
Patient
enrollment, a significant factor in the timing of clinical trials,
is affected by many factors including the competence of the CRO
running the study, size and nature of the patient population, the
proximity of patients to clinical sites, the eligibility criteria
for the trial, the design of the clinical trial, competing clinical
trials and clinicians' and patients' perceptions as to the
potential advantages of the drug being studied in relation to other
available therapies, including any new drugs that may be approved
for the indications we are investigating. Furthermore, we rely on
CROs and clinical trial sites to ensure the proper and timely
conduct of our clinical trials and while we have agreements
governing their committed activities, we have limited influence
over their actual performance.
16
On
August 10, 2017 we received a letter from the U.S. Food and Drug
Administration (FDA) stating that the clinical hold that had been
imposed on our Phase 3 cancer study with Multikine has been removed
and that all clinical trial activities under this Investigational
New Drug application (IND) may resume.
It remains possible that the regulatory authorities could determine
that one Phase 3 study is not sufficient to support a marketing
application in the United States. Under this circumstance, at least
one entirely new Phase 3 clinical trial would need to be conducted
to support a marketing application in the United States. If there
is a need to conduct an additional Phase 3 clinical trial, any such
requirement would have significant and severe material consequences
for us and could impact our ability to continue as a going
concern.
We
could also encounter significant delays and/or need to terminate a
development program for a product candidate if physicians encounter
unresolved ethical issues associated with enrolling patients in
clinical trials of our product candidates in addition to existing
treatments that have established safety and efficacy profiles.
Further, a clinical trial may be suspended or terminated by us, one
or more of the IRBs for the institutions in which such trials are
being conducted, by us upon a final recommendation by the
Independent Data Monitoring Committee, or IDMC, with which we agree
for such trial, or by FDA or other regulatory authorities, due to a
number of factors, including failure to conduct the clinical trial
in accordance with regulatory requirements or our clinical
protocols, as a result of inspection of the clinical trial
operations or trial site(s) by FDA or other regulatory authorities,
the imposition of a clinical hold or partial clinical hold ,
unforeseen safety issues or adverse side effects, failure to
demonstrate a benefit from using a product candidate, changes in
governmental regulations or administrative actions or lack of
adequate funding to continue the clinical trial. The occurrence of
any one or more of these events would have significant and severe
material consequences for us and could impact our ability to
continue as a going concern.
If we
experience termination of, or delays in the completion of, any
clinical trial of our product candidates, the commercial prospects
for our product candidates will be harmed, and our ability to
generate product revenues will be delayed. In addition, any delays
in completing our clinical trials will increase our costs, slow our
product development and approval process and jeopardize our ability
to commence product sales and generate revenues. Any of these
occurrences may harm our business, prospects, financial condition
and results of operations significantly. Many of the factors that
cause, or lead to, a delay in the commencement or completion of
clinical trials may also ultimately lead to a delay or the denial
of regulatory approval for our product candidates.
We
cannot be certain when or under what conditions we will undertake
future clinical trials. A variety of issues may delay the Phase 3
clinical trial for Multikine. Early trials for our other product
candidates, or the plans for later trials, may not satisfy the
requirements of regulatory authorities, such as the FDA. We may
fail to find subjects willing to enroll in our trials. We
manufacture Multikine in our own manufacturing facility, but rely
on third-party vendors to manage the trial process and other
activities, and these vendors may fail to meet appropriate
standards. Accordingly, the clinical trials relating to our product
candidates may not be completed on schedule, the FDA or foreign
regulatory agencies may order us to stop or modify our research, or
these agencies may not ultimately approve any of our product
candidates for commercial sale. Varying interpretations of the data
obtained from pre-clinical and clinical testing could delay, limit
or prevent regulatory approval of our product candidates. The data
collected from our clinical trials may not be sufficient to support
regulatory approval of our various product candidates, including
Multikine. Our failure to adequately demonstrate the safety and
efficacy of any of our product candidates would delay or prevent
regulatory approval of our product candidates in the United States,
which could prevent us from achieving profitability. Although we
had positive results in our Phase 2 trials for Multikine, those
results were for a small sample set, and we will not know how
Multikine will perform in a larger set of subjects until we are
well into, or complete, our Phase 3 clinical trial.
17
The
development and testing of product candidates and the process of
obtaining regulatory approvals and the subsequent compliance with
appropriate federal, state, local and foreign statutes and
regulations require the expenditure of substantial time and
financial resources. Failure to comply with the applicable U.S.
requirements at any time during the product development process,
approval process or after approval, may subject an applicant to
administrative or judicial sanctions. FDA sanctions could include,
among other actions, refusal to approve pending applications,
withdrawal of an approval, a clinical hold, termination of the
Phase 3 study, warning letters, product recalls or withdrawals from
the market, product seizures, total or partial suspension of
production or distribution, injunctions, fines, refusals of
government contracts, restitution, disgorgement or civil or
criminal penalties. Any agency or judicial enforcement action could
have a material adverse effect on us.
The
requirements governing the conduct of clinical trials,
manufacturing and marketing of our product candidates, including
Multikine, outside the United States vary from country to country.
Foreign approvals may take longer to obtain than FDA approvals and
can require, among other things, additional testing and different
trial designs. Foreign regulatory approval processes include all of
the risks associated with the FDA approval process. Some of those
agencies also must approve prices for products approved for
marketing. Approval of a product by the FDA or the EMA does not
ensure approval of the same product by the health authorities of
other countries. In addition, changes in regulatory requirements
for product approval in any country during the clinical trial
process and regulatory agency review of each submitted new
application may cause delays or rejections.
We have
only limited experience in filing and pursuing applications
necessary to gain regulatory approvals. Our lack of experience may
impede our ability to obtain timely approvals from regulatory
agencies, if at all. We will not be able to commercialize Multikine
and other product candidates until we have obtained regulatory
approval. In addition, regulatory authorities may also limit the
types of patients to which we or our third-party partners may
market Multikine or our other product candidates. Any failure to
obtain or any delay in obtaining required regulatory approvals may
adversely affect our or our third-party partners’ ability to
successfully market our product candidates.
Even if we obtain regulatory approval for our investigational
products, we will be subject to stringent, ongoing government
regulation.
If our
investigational products receive regulatory approval, either in the
United States or internationally, those products will be subject to
limitations on the approved indicated uses for which the product
may be marketed or to the conditions of approval, and may contain
requirements for potentially costly post-marketing testing,
including Phase 4 clinical trials, and surveillance of the
safety and efficacy of the investigational products. We will
continue to be subject to extensive regulatory requirements. These
regulations are wide-ranging and govern, among other
things:
●
product design,
development and manufacture;
●
product application
and use
●
adverse drug
experience;
●
product advertising
and promotion;
●
product
manufacturing, including good manufacturing practices
●
record keeping
requirements;
●
registration and
listing of our establishments and products with the FDA, EMA and
other state and national agencies;
●
product storage and
shipping;
18
●
drug sampling and
distribution requirements;
●
electronic record
and signature requirements; and
●
labeling changes or
modifications.
We and
any of our third-party manufacturers or suppliers must continually
adhere to federal regulations setting forth requirements, known as
current, Good Manufacturing Practices, or cGMPs, and their foreign
equivalents, which are enforced by the FDA, the EMA and other
national regulatory bodies through their facilities inspection
programs. If our facilities, or the facilities of our contract
manufacturers or suppliers, cannot pass a pre3-approval plant
inspection or fail such inspections in the future, the FDA, EMA or
other national regulators will not approve our marketing
applications for our product candidates, or may withdraw any prior
approval. In complying with cGMP and foreign regulatory
requirements, we and any of our potential third-party manufacturers
or suppliers will be obligated to expend time, money and effort in
production, record-keeping and quality control to ensure that our
product candidates meet applicable specifications and other
requirements.
If we
do not comply with regulatory requirements at any stage, whether
before or after marketing approval is obtained, we may be subject
to, among other things, license suspension or revocation, criminal
prosecution, seizure, injunction, fines, be forced to remove a
product from the market or experience other adverse consequences,
including restrictions or delays in obtaining regulatory marketing
approval for such products or for other product candidates for
which we seek approval. This could materially harm our financial
results, reputation and stock price. Additionally, we may not be
able to obtain the labeling claims necessary or desirable for
product promotion. If we or other parties identify adverse effects
after any of our products are on the market, or if manufacturing
problems occur, regulatory approval may be suspended or withdrawn.
We may be required to reformulate our products, conduct additional
clinical trials, make changes in product labeling or indications of
use, or submit additional marketing applications to support any
changes. If we encounter any of the foregoing problems, our
business and results of operations will be harmed and the market
price of our common stock may decline.
The FDA and other governmental authorities’
policies may change and additional government regulations may be
enacted that could prevent, limit or delay regulatory approval
of our product candidates. If
we are slow or unable to adapt to changes in existing requirements
or the adoption of new requirements or policies, or if we are not
able to maintain regulatory compliance, we may lose any marketing
approval that we may have obtained, which would adversely affect
our business, prospects and ability to achieve or sustain
profitability. We cannot predict the extent of adverse
government regulations which might arise from future legislative or
administrative action. Without government approval, we will be
unable to sell any of our product candidates.
Our product candidates may cause undesirable side effects or have
other properties that could delay or prevent their regulatory
approval, limit the commercial profile of an approved label, or
result in significant negative consequences following marketing
approval, if any.
Undesirable side
effects caused by our product candidates could cause us or
regulatory authorities to interrupt, delay or halt clinical trials
and could result in a more restrictive label or the delay or denial
of regulatory approval by the FDA or other comparable foreign
authorities. Results of our clinical trials could reveal a high and
unacceptable severity and/or prevalence of these or other side
effects. In such an event, our trials could be suspended or
terminated and the FDA or comparable foreign regulatory authorities
could order us to cease further development of, or deny approval
of, our product candidates for any or all targeted indications. The
drug-related side effects could affect patient recruitment or the
ability of enrolled patients to complete the trial or result in
potential product liability claims. Any of these occurrences may
harm our business, financial condition and prospects
significantly.
19
Additionally if one
or more of our product candidates receives marketing approval, and
we or others later identify undesirable side effects caused by such
products, a number of potentially significant negative consequences
could result, including:
●
regulatory
authorities may withdraw approvals of such product;
●
regulatory
authorities may require additional warnings on the
label;
●
we may be required
to create a medication guide outlining the risks of such side
effects for distribution to patients;
●
we could be sued
and held liable for harm caused to patients; and
●
our reputation may
suffer.
Any of
these events could prevent us from achieving or maintaining market
acceptance of the particular product candidate, if approved, and
could significantly harm our business, results of operations and
prospects.
We rely on third parties to conduct our preclinical and clinical
trials. If these third parties do not successfully carry out their
contractual duties and meet regulatory requirements, or meet
expected deadlines, we may not be able to obtain regulatory
approval for or commercialize our product candidates and our
business could be substantially harmed.
We have
relied upon and plan to continue to rely upon third-party CROs to
prepare for, conduct, monitor and manage data for our preclinical
and clinical programs. We rely on these parties for all aspects of
the execution of our preclinical and clinical trials, and although
we diligently oversee and carefully manage our CROs, we directly
control only certain aspects of their activities and rely upon them
to provide timely, complete, and accurate reports on their conduct
of our studies. Although such third parties provide support and
represent us for regulatory purposes in the context of our clinical
trials, ultimately we are responsible for ensuring that each of our
studies is conducted in accordance with the applicable protocol,
legal, regulatory, and scientific standards, and our reliance on
the CROs does not relieve us of our regulatory responsibilities. We
and our CROs acting on our behalf, as well as principal
investigators and trial sites, are required to comply with Good
Clinical Practice, or GCP and other applicable requirements, which
are implemented through regulations and guidelines enforced by the
FDA, the Competent Authorities of the Member States of the European
Economic Area, or EEA, and comparable foreign regulatory
authorities for all of our products in clinical development.
Regulatory authorities enforce these GCPs through periodic
inspections of trial sponsors, principal investigators, and trial
sites. If we or any of our CROs fail to comply with applicable GCPs
or other applicable regulations, the clinical data generated in our
clinical trials may be determined to be unreliable and we may
therefore need to enroll additional subjects in our clinical
trials, or the FDA, EMA or comparable foreign regulatory
authorities may require us to perform an additional clinical trial
or trials before approving our marketing applications. Moreover, if
we or any of our CROs, principal investigators, or trial sites,
fail to comply with applicable regulatory and GCP requirements,
then we, our CROs, principal investigators, or trial sites may be
subject to enforcement actions, such as fines, warning letters,
untitled letters, clinical holds, civil or criminal penalties,
and/or injunctions. We cannot assure you that upon inspection by a
given regulatory authority, such regulatory authority will
determine that any of our clinical trials comply with GCP
regulations. In addition, our clinical trials must be conducted
with product produced under GMP regulations. Our failure to comply
with these regulations may require us to delay or repeat clinical
trials, which would delay the regulatory approval
process.
20
If any of our
relationships with our third-party CROs terminate, we may not be
able to enter into arrangements with alternative CROs or to do so
on commercially reasonable terms. In addition, our CROs are not our
employees, and except for remedies available to us under our
agreements with such CROs, we cannot control whether or not they
devote sufficient time and resources to our on-going clinical,
nonclinical and preclinical programs. If CROs do not successfully
fulfill their regulatory obligations, carry out their contractual
duties or obligations or meet expected deadlines, if they need to
be replaced or if the quality or accuracy of the clinical data they
obtain is compromised due to the failure to adhere to our clinical
protocols, regulatory requirements or for other reasons, our
clinical trials may be extended, delayed or terminated, and we may
not be able to obtain regulatory approval for or successfully
commercialize our product candidates. As a result, our results of
operations and the commercial prospects for our product candidates
would be harmed, our costs could increase and our ability to
generate revenues could be delayed.
Switching or adding
additional CROs involves additional cost and requires management
time and focus. In addition, there is a natural transition period
when a new CRO commences work. As a result, delays may occur, which
can materially impact our ability to meet our desired clinical
development timelines. Though we diligently oversee and carefully
manage our relationships with our CROs, there can be no assurance
that we will not encounter similar challenges or delays in our
clinical development in the future or that these delays or
challenges will not have a material adverse impact on our business,
financial condition and prospects.
We have obtained orphan drug designation from the FDA for Multikine
for neoadjuvant, or primary, therapy in patients with squamous cell
carcinoma of the head and neck, but we may be unable to maintain
the benefits associated with orphan drug designation, including the
potential for market exclusivity.
Under
the Orphan Drug Act, the FDA may grant orphan drug designation to a
drug or biologic intended to treat a rare disease or condition,
which is defined as one occurring in a patient population of fewer
than 200,000 in the United States, or a patient population greater
than 200,000 in the United States where there is no reasonable
expectation that the cost of developing the drug or biologic will
be recovered from sales in the United States. In the United States,
orphan drug designation entitles a party to financial incentives
such as opportunities for grant funding towards clinical trial
costs, tax advantages and user-fee waivers. In addition, if a
product that has orphan drug designation subsequently receives the
first FDA approval for the disease for which it has such
designation, the product is entitled to orphan drug exclusivity,
which means that the FDA may not approve any other applications,
including a full Biologics License Application, or BLA, to market
the same biologic for the same indication for seven years, except
in limited circumstances, such as a showing of clinical superiority
to the product with orphan drug exclusivity or where the
manufacturer is unable to assure sufficient product
quantity.
Even
though we have received orphan drug designation for Multikine for
the treatment of squamous cell carcinoma of the head and neck, we
may not be the first to obtain marketing approval of a product for
the orphan-designated indication due to the uncertainties
associated with developing pharmaceutical products. In addition,
exclusive marketing rights in the United States may be limited if
we seek approval for an indication broader than the
orphan-designated indication, or may be lost if the FDA later
determines that the request for designation was materially
defective or if we are unable to assure sufficient quantities of
the product to meet the needs of patients with the rare disease or
condition. Further, even if we obtain orphan drug exclusivity for a
product candidate, that exclusivity may not effectively protect the
product candidate from competition because different drugs with
different active moieties can be approved for the same condition.
Even after an orphan product is approved, the FDA can subsequently
approve another drug with the same active moiety for the same
condition if the FDA concludes that the later drug is safer, more
effective, or makes a major contribution to patient care. Orphan
drug designation neither shortens the development time or
regulatory review time of a drug nor gives the drug any advantage
in the regulatory review or approval process.
21
Our current and future relationships with healthcare professionals,
principal investigators, consultants, potential customers and
third-party payors in the United States and elsewhere may be
subject, directly or indirectly, to applicable healthcare laws and
regulations.
Healthcare
providers, physicians and third-party payors in the United States
and elsewhere will play a primary role in the recommendation and
prescription of any drug candidates for which we obtain marketing
approval. Our current and future arrangements with healthcare
professionals, principal investigators, consultants, potential
customers and third-party payors may expose us to broadly
applicable healthcare laws, including, without
limitation:
●
the federal
Anti-Kickback Statute, which prohibits, among other things, persons
from knowingly and willfully soliciting, offering, receiving or
providing remuneration, directly or indirectly, in cash or in kind,
to induce or reward, or in return for, either the referral of an
individual for, or the purchase, lease, order or recommendation of,
any good, facility, item or service, for which payment may be made,
in whole or in part, under federal and state healthcare programs
such as Medicare and Medicaid. A person or entity does not need to
have actual knowledge of the statute or specific intent to violate
it to have committed a violation. In addition, the Affordable Care
Act provides that the government may assert that a claim including
items or services resulting from a violation of the federal
Anti-Kickback Statute constitutes a false or fraudulent claim for
purposes of the False Claims Act;
●
federal civil and
criminal false claims laws, including the federal False Claims Act,
which impose criminal and civil penalties, including civil
whistleblower actions, against individuals or entities for, among
other things, knowingly presenting, or causing to be presented, to
the federal government, including the Medicare and Medicaid
programs, claims for payment that are false or fraudulent or making
a false statement to avoid, decrease or conceal an obligation to
pay money to the federal government;
●
the civil monetary
penalties statute, which imposes penalties against any person or
entity who, among other things, is determined to have presented or
caused to be presented a claim to a federal health program that the
person knows or should know is for an item or service that was not
provided as claimed or is false or fraudulent;
●
the federal Health
Insurance Portability and Accountability Act of 1996, or HIPAA,
which created new federal criminal statutes that prohibit knowingly
and willfully executing, or attempting to execute, a scheme to
defraud any healthcare benefit program or obtain, by means of false
or fraudulent pretenses, representations or promises, any of the
money or property owned by, or under the custody or control of, any
healthcare benefit program, regardless of the payor
(e.g., public or private), knowingly and willfully embezzling
or stealing from a health care benefit program, willfully
obstructing a criminal investigation of a healthcare offense and
knowingly and willfully falsifying, concealing or covering up by
any trick or device a material fact or making any materially false
statements in connection with the delivery of, or payment for,
healthcare benefits, items or services relating to healthcare
matters. A person or entity does not need to have actual knowledge
of the statute or specific intent to violate it to have committed a
violation;
●
HIPAA, as amended
by the Health Information Technology for Economic and Clinical
Health Act of 2009, or HITECH, and their respective implementing
regulations, which impose obligations on covered entities,
including healthcare providers, health plans, and healthcare
clearinghouses, as well as their respective business associates
that create, receive, maintain or transmit individually
identifiable health information for or on behalf of a covered
entity, with respect to safeguarding the privacy, security and
transmission of individually identifiable health
information;
22
●
the federal
Physician Payments Sunshine Act and its implementing regulations,
which imposed annual reporting requirements for certain
manufacturers of drugs, devices, biologicals and medical supplies
for payments and “transfers of value” provided to
physicians and teaching hospitals, as well as ownership and
investment interests held by physicians and their immediate family
members; and
●
analogous state and
foreign laws, such as state anti-kickback and false claims laws,
which may apply to sales or marketing arrangements and claims
involving healthcare items or services reimbursed by
non-governmental third-party payors, including private insurers;
state laws that require pharmaceutical companies to comply with the
pharmaceutical industry’s voluntary compliance guidelines and
the relevant compliance guidance promulgated by the federal
government or otherwise restrict payments that may be made to
healthcare providers; state and foreign laws that require drug
manufacturers to report information related to payments and other
transfers of value to physicians and other healthcare providers or
marketing expenditures; and state and foreign laws governing the
privacy and security of health information in certain
circumstances, many of which differ from each other in significant
ways and often are not preempted by HIPAA, thus complicating
compliance efforts.
Efforts
to ensure that our future business arrangements with third parties
will comply with applicable healthcare laws and regulations may
involve substantial costs. It is possible that governmental
authorities will conclude that our business practices may not
comply with current or future statutes, regulations or case law
involving applicable fraud and abuse or other healthcare laws. If
our operations are found to be in violation of any of these laws or
any other governmental regulations, we may be subject to
significant civil, criminal and administrative penalties,
including, without limitation, damages, fines, imprisonment,
exclusion from participation in government healthcare programs,
such as Medicare and Medicaid, and the curtailment or restructuring
of our operations, all of which could significantly harm our
business. If any of the physicians or other healthcare providers or
entities with whom we expect to do business, including our current
and future collaborators, are found not to be in compliance with
applicable laws, they may be subject to criminal, civil or
administrative sanctions, including exclusions from participation
in government healthcare programs, which could also adversely
affect our business.
Failure to obtain or maintain adequate coverage and reimbursement
for our product candidates, if approved, could limit our ability to
market those products and decrease our ability to generate
revenue.
Sales
of our product candidates will depend substantially, both
domestically and abroad, on the extent to which the costs of our
product candidates will be paid by health maintenance, managed
care, pharmacy benefit, and similar healthcare management
organizations, or reimbursed by government authorities, private
health insurers and other third-party payors. We anticipate that
government authorities and other third-party payors will continue
efforts to contain healthcare costs by limiting the coverage and
reimbursement levels for new drugs. If coverage and reimbursement
are not available, or are available only to limited levels, we may
not be able to successfully commercialize our product candidates.
Even if coverage is provided, the approved reimbursement amount may
not be high enough to allow us to establish or maintain pricing
sufficient to realize a return on our investment. It is difficult
to predict at this time what third-party payors will decide with
respect to the coverage and reimbursement for our product
candidates.
23
Healthcare legislative reform measures may have a material adverse
effect on our business and results of operations.
In the
United States, there have been and continue to be a number of
legislative initiatives to contain healthcare costs that may result
in more limited coverage or downward pressure on the price we may
otherwise receive for our product candidates. For example, in March
2010, the Patient Protection and Affordable Care Act, as amended by
the Health Care and Education Reconciliation Act, or collectively,
the Affordable Care Act, was passed, which substantially changes
the way health care is financed by both governmental and private
insurers, and significantly impacts the U.S. pharmaceutical
industry. The Affordable Care Act, among other things, addressed a
new methodology by which rebates owed by manufacturers under the
Medicaid Drug Rebate Program are calculated for drugs that are
inhaled, infused, instilled, implanted or injected, increased the
minimum Medicaid rebates owed by manufacturers under the Medicaid
Drug Rebate Program and extended the rebate program to individuals
enrolled in Medicaid managed care organizations, established annual
fees and taxes on manufacturers of certain branded prescription
drugs, and established the Center for Medicare and Medicaid
Innovation with broad authority to test and implement new payment
models under Medicare and Medicaid, which are designed to reduce
expenditures while preserving and enhancing quality of
care.
In
addition, other legislative changes have been proposed and adopted
in the United States since the Affordable Care Act was enacted. On
August 2, 2011, the Budget Control Act of 2011 among other things,
created measures for spending reductions by Congress. A Joint
Select Committee on Deficit Reduction, tasked with recommending a
targeted deficit reduction of at least $1.2 trillion for the years
2013 through 2021, was unable to reach required goals, thereby
triggering the legislation's automatic reduction to several
government programs. This includes aggregate reductions of Medicare
payments to providers of 2% per fiscal year, which went into effect
in April 2013 and, due to subsequent legislative amendments to the
statute, will remain in effect through 2024 unless additional
Congressional action is taken. On January 2, 2013, former President
Obama signed into law the American Taxpayer Relief Act of 2012,
which, among other things, further reduced Medicare payments to
several providers, including hospitals, imaging centers and cancer
treatment centers. On April 16, 2015, former President Obama signed
into law the Medicare Access and CHIP Reauthorization Act of 2015,
or MACRA. Among other things, MACRA creates incentives for
physicians to participate in alternative payment models under
Medicare that emphasize quality and value in place of the
traditional, volume-based fee-for-service program. We expect that
additional state and federal healthcare reform measures will be
adopted in the future, any of which could limit the amounts that
federal and state governments will pay for healthcare products and
services, which could result in reduced demand for our product
candidates or additional pricing pressures.
Foreign governments often impose strict price controls, which may
adversely affect our future profitability.
We
intend to seek approval to market Multikine in both the United
States and foreign jurisdictions. If we obtain approval in one or
more foreign jurisdictions, we will be subject to rules and
regulations in those jurisdictions relating to Multikine. In some
foreign countries, particularly in the European Union, prescription
drug pricing is subject to governmental control. In these
countries, pricing negotiations with governmental authorities can
take considerable time after the receipt of marketing approval for
a drug candidate. Coverage and reimbursement decisions in one
foreign jurisdiction may impact decisions in other countries. To
obtain reimbursement or pricing approval in some countries, we may
be required to conduct clinical trials that demonstrate our product
candidate is more effective than current treatments and that
compare the cost-effectiveness of Multikine to other available
therapies. If reimbursement of Multikine is unavailable or limited
in scope or amount, or if pricing is set at unsatisfactory levels,
we may be unable to achieve or sustain profitability.
24
Risks Related to Intellectual Property
We may not be able to achieve or maintain a competitive position,
and other technological developments may result in our proprietary
technologies becoming uneconomical or obsolete.
We are
involved in a biomedical field that is undergoing rapid and
significant technological change. The pace of change continues to
accelerate. The successful development of product candidates from
our compounds, compositions and processes, through research
financed by us, or as a result of possible third-party licensing
arrangements with pharmaceutical or other companies, is not
assured. We may fail to apply for patents on important technologies
or product candidates in a timely fashion, or at all.
Many
companies are working on drugs designed to cure or treat cancer or
cure and treat viruses, such as HPV or H1N1. Many of these
companies have financial, research and development, and marketing
resources which are much greater than ours and are capable of
providing significant long-term competition either by establishing
in-house research groups or by forming collaborative ventures with
other entities. In addition, smaller companies and non-profit
institutions are active in research relating to cancer and
infectious diseases. The future market share of Multikine or our
other product candidates, if approved, will be reduced or
eliminated if our competitors develop and obtain approval for
products that are safer or more effective than our product
candidates. Moreover, the patent positions of pharmaceutical
companies are highly uncertain and involve complex legal and
factual questions for which important legal principles are often
evolving and remain unresolved. As a result, the validity and
enforceability of patents cannot be predicted with certainty. In
addition, we do not know whether:
●
we were the first
to make the inventions covered by each of our issued patents and
pending patent applications;
●
we were the first
to file patent applications for these inventions;
●
others will
independently develop similar or alternative technologies or
duplicate any of our technologies;
●
any of our pending
patent applications will result in issued patents;
●
any of our patents
will be valid or enforceable;
●
any patents issued
to us or our collaboration partners will provide us with any
competitive advantages, or will be challenged by third
parties;
●
we will be able to
develop additional proprietary technologies that are
patentable;
●
the U.S. government
will exercise any of its statutory rights to our intellectual
property that was developed with government funding;
or
●
our business may
infringe the patents or other proprietary rights of
others.
Our patents might not protect our technology from competitors, in
which case we may not have any advantage over competitors in
selling any products that we may develop.
Our
commercial success will depend in part on our ability to obtain
additional patents and protect our existing patent position, as
well as our ability to maintain adequate intellectual property
protection for our technologies, product candidates, and any future
products in the United States and other countries. If we do not
adequately protect our technology, product candidates and future
products, competitors may be able to use or practice them and erode
or negate any competitive advantage we may have, which could harm
our business and ability to achieve profitability. The laws of some
foreign countries do not protect our proprietary rights to the same
extent or in the same manner as U.S. laws, and we may encounter
significant problems in protecting and defending our proprietary
rights in these countries. We will be able to protect our
proprietary rights from unauthorized use by third parties only to
the extent that our proprietary technologies, product candidates
and any future products are covered by valid and enforceable
patents or are effectively maintained as trade
secrets.
25
Certain
aspects of our technologies are covered by U.S. and foreign
patents. In addition, we have a number of new patent applications
pending. There is no assurance that the applications still pending
or which may be filed in the future will result in the issuance of
any patents. Furthermore, there is no assurance as to the breadth
and degree of protection any issued patents might afford us.
Disputes may arise between us and others as to the scope and
validity of these or other patents. Any defense of the patents
could prove costly and time consuming and there can be no assurance
that we will be in a position, or will deem it advisable, to carry
on such a defense. A suit for patent infringement could result in
increasing costs, delaying or halting development, or even forcing
us to abandon a product candidate. Other private and public
concerns, including universities, may have filed applications for,
may have been issued, or may obtain additional patents and other
proprietary rights to technology potentially useful or necessary to
us. We are not currently aware of any such patents, but the scope
and validity of such patents, if any, and the cost and availability
of such rights are impossible to predict.
Much of our intellectual property is protected as trade secrets or
confidential know-how, not as a patent.
We
consider proprietary trade secrets and/or confidential know-how and
unpatented know-how to be important to our business. Much of our
intellectual property pertains to our manufacturing system, certain
aspects of which may not be suitable for patent filings and must be
protected as trade secrets and/or confidential know-how. This type
of information must be protected diligently by us to protect its
disclosure to competitors, since legal protections after disclosure
may be minimal or non-existent. Accordingly, much of the value of
this intellectual property is dependent upon our ability to keep
our trade secrets and know-how confidential.
To
protect this type of information against disclosure or
appropriation by competitors, our policy is to require our
employees, consultants, contractors and advisors to enter into
confidentiality agreements with us. However, current or former
employees, consultants, contractors and advisers may
unintentionally or willfully disclose our confidential information
to competitors, and confidentiality agreements may not provide an
adequate remedy in the event of unauthorized disclosure of
confidential information. Enforcing a claim that a third party
obtained illegally, and is using, trade secrets and/or confidential
know-how is expensive, time consuming and unpredictable. The
enforceability of confidentiality agreements may vary from
jurisdiction to jurisdiction.
In
addition, in some cases a regulator considering our application for
product candidate approval may require the disclosure of some or
all of our proprietary information. In such a case, we must decide
whether to disclose the information or forego approval in a
particular country. If we are unable to market our product
candidates in key countries, our opportunities and value may
suffer.
Failure
to obtain or maintain trade secrets and/or confidential know-how
trade protection could adversely affect our competitive position.
Moreover, our competitors may independently develop substantially
equivalent proprietary information and may even apply for patent
protection in respect of the same. If successful in obtaining such
patent protection, our competitors could limit our use of such
trade secrets and/or confidential know-how.
We may be subject to claims challenging the inventorship or
ownership of our patents and other intellectual
property.
We may
also be subject to claims that former employees, collaborators or
other third parties have an ownership interest in our patents or
other intellectual property. We may be subject to ownership
disputes in the future arising, for example, from conflicting
obligations of consultants or others who are involved in developing
our product candidates. Litigation may be necessary to defend
against these and other claims challenging inventorship or
ownership. If we fail in defending any such claims, in addition to
paying monetary damages, we may lose valuable intellectual property
rights, such as exclusive ownership of, or right to use, valuable
intellectual property. Such an outcome could have a material
adverse effect on our business. Even if we are successful in
defending against such claims, litigation could result in
substantial costs and be a distraction to management and
employees.
26
Risks related to our Common Stock
You may experience future dilution as a result of future equity
offerings or other equity issuances.
We
expect that significant additional capital will be needed in the
future to continue our planned operations. To raise additional
capital, we may in the future offer additional shares of our common
stock or other securities convertible into or exchangeable for our
common stock. We cannot assure you that we will be able
to sell shares or other securities in any other offering at a price
per share that is equal to or greater than the price per share paid
by investors in this offering. The price per share at
which we sell additional shares of our common stock or other
securities convertible into or exchangeable for our common stock in
future transactions may be higher or lower than the price per share
in this offering. To the extent we raise additional
capital by issuing equity securities, our stockholders may
experience substantial dilution. If we sell common stock,
convertible securities or other equity securities, your investment
in our common stock will be diluted. These sales may also result in
material dilution to our existing stockholders, and new investors
could gain rights superior to our existing
stockholders.
As of
the August 17, 2018, there were outstanding warrants
and options which allow the holders to purchase 18,453,936 shares
that may be issued upon the exercise of outstanding warrants, with
a weighted average exercise price of $4.81 per share, and 3,072,164
shares that may be issued upon the exercise of outstanding options,
with a weighted average exercise price of $7.43 per share.
The outstanding options and warrants could adversely affect our
ability to obtain future financing or engage in certain mergers or
other transactions, since the holders of options and warrants can
be expected to exercise them at a time when we may be able to
obtain additional capital through a new offering of securities on
terms more favorable to us than the terms of the outstanding
options and warrants. For the life of the options and
warrants, the holders have the opportunity to profit from a rise in
the market price of our common stock without assuming the risk of
ownership. The issuance of shares upon the exercise of
outstanding options and warrants will also dilute the ownership
interests of our existing stockholders.
Our ability to utilize our net operating loss carryforwards and
certain other tax attributes may be limited.
Under
Section 382 of the Internal Revenue Code of 1986, as amended, if a
corporation undergoes an “ownership change” (generally
defined as a greater than 50% change (by value) in its equity
ownership over a three-year period), the corporation’s
ability to use its pre-change net operating loss carryforwards and
other pre-change tax attributes to offset its post-change income
may be limited. As a result of our public offerings and other
transactions, we may experience ownership changes in the future
based on subsequent shifts in our stock ownership, some of which
are outside our control. As a result, our ability to use our
pre-change net operating loss carryforwards and other pre-change
tax attributes to offset U.S. federal taxable income may be subject
to limitations, which could result in increased tax liability to
us.
Since we do not intend to pay dividends on our common stock, any
potential return to investors will result only from any increases
in the price of our common stock.
At the
present time, we intend to use available funds to finance our
operations. Accordingly, while payment of dividends rests within
the discretion of our board of directors, no common stock dividends
have been declared or paid by us and we have no intention of paying
any common stock dividends in the foreseeable future. Additionally,
any future debt financing arrangement may contain terms prohibiting
or limiting the amount of dividends that may be declared or paid on
our common stock. Any return to our investors will therefore be
limited to appreciation in the price of our common stock, which may
never occur. If our stock price does not increase, our investors
are unlikely to receive any return on their investments in our
common stock.
27
The price of our common stock has been volatile and is likely to
continue to be volatile, which could result in substantial losses
for our shareholders.
Our
stock price has been, and is likely to continue to be, volatile. As
a result of this volatility, you may not be able to sell your
shares at or above its current market price. The market price for
our common stock may be influenced by many factors,
including:
●
actual or
anticipated fluctuations in our financial condition and operating
results;
●
actual or
anticipated changes in our growth rate relative to our
competitors;
●
competition from
existing products or new products or product candidates that may
emerge;
●
development of new
technologies that make our technology less attractive;
●
changes in
physician, hospital or healthcare provider practices that may make
our product candidates less useful;
●
announcements by
us, our partners or our competitors of significant acquisitions,
strategic partnerships, joint ventures, collaborations or capital
commitments;
●
developments or
disputes concerning patent applications, issued patents or other
proprietary rights;
●
the recruitment or
departure of key personnel;
●
failure to meet or
exceed financial estimates and projections of the investment
community or that we provide to the public;
●
actual or
anticipated changes in estimates as to financial results,
development timelines or recommendations by securities
analysts;
●
variations in our
financial results or those of companies that are perceived to be
similar to us;
●
changes to coverage
and reimbursement levels by commercial third-party payors and
government payors, including Medicare, and any announcements
relating to reimbursement levels;
●
general economic,
industry and market conditions; and
●
the other factors
described in this “Risk Factors” section.
28
CEL-SCI has been advised that it is not in compliance with certain
continued listing standards of the NYSE American.
On July
12, 2018, CEL-SCI received a letter from the NYSE American, its
current listing exchange, which advised CEL-SCI that, based upon
its quarterly report for the quarter ended March 31, 2018, CEL-SCI
was noncompliant with certain continued listing standards of the
NYSE American. CEL-SCI can maintain its listing by submitting a
plan of compliance by August 13, 2018. This plan must advise of
actions CEL-SCI has taken or will take to regain compliance with
the continued listing standards by January 14, 2019. CEL-SCI
submitted its plan on July 30, 2018.
On August 16, 2018 the Exchange notified CEL-SCI that it
accepted its plan of compliance and granted CEL-SCI until January
14, 2019 to regain compliance with the continued listing
standards. Although, the NYSE American will not normally
remove the securities if an issuer has a market capitalization of
at least $50 million if CEL-SCI does not make sufficient progress
under the plan to reestablish compliance by January 14, 2019, the
staff of the exchange may initiate proceedings to delist
CEL-SCI’s securities from the NYSE American. CEL-SCI may
appeal a delisting determination in accordance with the rules of
the exchange.
The
letter from the NYSE American has no immediate effect on the
listing of CEL-SCI’s securities on the exchange.
Under our amended bylaws, stockholders that initiate certain
proceedings may be obligated to reimburse us and our officers and
directors for all fees, costs and expenses incurred in connection
with such proceedings if the claim proves
unsuccessful.
On
February 18, 2015, we adopted new bylaws which include a
fee-shifting provision in Article X for stockholder claims. Article
X provides that in the event any stockholder initiates or asserts a
claim against us, or any of our officers or directors, including
any derivative claim or claim purportedly filed on our behalf, and
the stockholder does not obtain a judgment on the merits that
substantially achieves, in substance and amount, the full remedy
sought, then the stockholder will be obligated to reimburse us and
any of our officers or directors named in the action, for all fees,
costs and expenses of every kind and description that we or our
officers or directors may incur in connection with the
claim. In adopting Article X, it is our intent
that:
●
all actions,
including federal securities law claims, would be subject to
Article X;
●
the phrase “a
judgment on the merits” means the determination by a court of
competent jurisdiction on the matters submitted to the
court;
●
the phrase
“substantially achieves, in both substance and amount”
means the plaintiffs in the action would be awarded at least 90% of
the relief sought;
●
only persons who
were stockholders at the time an action was brought would be
subject to Article X; and
●
only the directors
or officers named in the action would be allowed to
recover.
The
fee-shifting provision contained in Article X of our bylaws is not
limited to specific types of actions, but is rather potentially
applicable to the fullest extent permitted by law. Fee-shifting
bylaws are relatively new and untested. The case law and potential
legislative action on fee-shifting bylaws are evolving and there
exists considerable uncertainty regarding the validity of, and
potential judicial and legislative responses to, such bylaws. For
example, it is unclear whether our ability to invoke our
fee-shifting bylaw in connection with claims under the federal
securities laws, including any claims related to this offering,
would be pre-empted by federal law. Similarly, it is unclear how
courts might apply the standard that a claiming stockholder must
obtain a judgment that substantially achieves, in substance and
amount, the full remedy sought. The application of our fee-shifting
bylaw in connection with such claims, if any, will depend in part
on future developments of the law. We cannot assure you that we
will or will not invoke our fee-shifting bylaw in any particular
dispute, including any claims related to this offering. In
addition, given the unsettled state of the law related to
fee-shifting bylaws, such as ours, we may incur significant
additional costs associated with resolving disputes with respect to
such bylaw, which could adversely affect our business and financial
condition.
29
If a
stockholder that brings any such claim, suit, action or proceeding
is unable to obtain the required judgment, the attorneys’
fees and other litigation expenses that might be shifted to a
claiming stockholder are potentially significant. This fee-shifting
bylaw, therefore, may dissuade or discourage stockholders (and
their attorneys) from initiating lawsuits or claims against us or
our directors and officers. In addition, it may impact the
fees, contingency or otherwise, required by potential
plaintiffs’ attorneys to represent our stockholders or
otherwise discourage plaintiffs’ attorneys from representing
our stockholders at all. As a result, this bylaw may limit the
ability of stockholders to affect our management and direction,
particularly through litigation or the threat of
litigation.
The provision of our amended bylaws requiring exclusive venue in
the U.S. District Court for Delaware for certain types of lawsuits
may have the effect of discouraging lawsuits against us and our
directors and officers.
Article
X of our amended bylaws provides that stockholder claims brought
against us, or our officers or directors, including any derivative
claim or claim purportedly filed on our behalf, must be brought in
the U.S. District Court for the district of Delaware and that with
respect to any such claim, the laws of Delaware will
apply.
The
exclusive forum provision may limit a stockholder’s ability
to bring a claim in a judicial forum the stockholder finds
favorable for disputes with us or our directors or officers, and
may have the effect of discouraging lawsuits with respect to claims
that may benefit us or our stockholders.
COMPARATIVE SHARE DATA
|
|
Number of Shares
|
|
Shares outstanding
as of August 17, 2018
|
24,021,058
|
The
number of shares outstanding as of August 17, 2018
excludes shares which may be issued upon the exercise of the
options or warrants described below.
|
|
Number of
Shares
|
Reference
|
|
Shares issuable
upon exercise of Series N warrants
|
85,339
|
A
|
30
|
|
Number of
Shares
|
Reference
|
|
Shares issuable
upon exercise of options granted to CEL-SCI's
officers,
directors, employees, consultants and third parties
|
3,070,164
|
B
|
|
Shares issuable
upon exercise of Series S warrants
|
327,729
|
C
|
|
Shares issuable
upon exercise of Series V warrants
|
810,127
|
D
|
|
Shares issuable
upon exercise of Series W warrants
|
688,930
|
E
|
|
Shares issuable
upon exercise of Series X warrants
|
120,000
|
F
|
|
Shares issuable
upon exercise of Series Y warrants
|
26,000
|
G
|
|
Shares issuable
upon exercise of Series Z warrants
|
264,000
|
H
|
|
Shares issuable
upon exercise of Series ZZ warrants
|
20,000
|
H
|
|
Shares issuable
upon exercise of Series AA warrants
|
200,000
|
I
|
|
Shares issuable
upon exercise of Series BB warrants
|
16,000
|
I
|
|
Shares issuable
upon exercise of Series CC warrants
|
680,480
|
J
|
|
Shares issuable
upon exercise of Series DD warrants
|
1,360,960
|
J
|
|
Shares issuable
upon exercise of Series EE warrants
|
1,360,960
|
J
|
|
Shares issuable
upon exercise of Series FF warrants
|
68,048
|
J
|
|
Shares issuable
upon exercise of Series GG warrants
|
400,000
|
K
|
|
Shares issuable
upon exercise of Series HH warrants
|
20,000
|
K
|
|
Shares issuable
upon exercise of Series II warrants
|
600,000
|
L
|
|
Shares issuable
upon exercise of Series JJ warrants
|
30,000
|
L
|
|
Shares issuable
upon exercise of Series KK warrants
|
395,970
|
M
|
|
Shares issuable
upon exercise of Series LL warrants
|
26,398
|
M
|
|
Shares issuable
upon exercise of Series MM warrants
|
893,491
|
N
|
|
Shares issuable
upon exercise of Series NN warrants
|
539,300
|
O
|
|
Shares issuable
upon exercise of Series OO warrants
|
60,000
|
P
|
|
Shares issuable
upon exercise of Series PP warrants
|
1,674,500
|
Q
|
|
Shares issuable
upon exercise of Series QQ warrants
|
31,063
|
Q
|
|
Shares issuable
upon exercise of Series RR warrants
|
583,057
|
R
|
|
Shares issuable
upon exercise of Series SS warrants
|
1,013,162
|
S
|
|
Shares issuable
upon exercise of Series TT warrants
|
1,875,860
|
T
|
|
Shares issuable
upon exercise of Series UU warrants
|
187,562
|
U
|
|
Shares issuable
upon exercise of Series VV warrants
|
3,900,000
|
V
|
|
Shares issuable
upon exercise of Series WW warrants
|
195,000
|
V
|
A.
As of July 27,
2018, 85,339 Series N warrants entitle the holders to purchase one
share of the Company's common stock at a price of $3.00 per share
at any time prior to February 18,
2020.
B.
The options are
exercisable at prices ranging from $1.59 to $415 per share. CEL-SCI
may also grant options to purchase additional shares under its
Incentive Stock Option and Non-Qualified Stock Option
Plans.
C.
The Series S
warrants may be exercised at any time on or before October 11, 2018
at a price of $31.25 per share. As of August 17, 2018,
792,940 Series S Warrants had been exercised. The remaining 327,729
Series S warrants entitle the holders to purchase one share of
CEL-SCI's common stock at a price of $31.25 per share.
31
D.
The Series V
warrants were immediately exercisable at a price of $19.75 and
expire on May 28, 2020.
E.
The Series W
warrants are exercisable at a price of $16.75 and expire on October
28, 2020.
F.
The Series X
warrant are exercisable at a price of $9.25 per share at any time
on or before January 13, 2021.
G.
The Series Y
warrant are exercisable at a price of $12.00 per share at any time
on or before February 15, 2019.
H
The Series Z
warrants may be exercised at any time on or before November 23,
2021 at a price of $13.75 per share. The Series ZZ warrants may be
exercised at any time on or before May 18, 2021 at a price of
$13.75 per share.
I.
The Series AA
warrants may be exercised at any time on or before February 22,
2022 at a price of $13.75 per share. The Series BB warrants may be
exercised at any time on or before August 22, 2021 at a price of
$13.75 per share.
J.
The Series CC
warrants may be exercised at any time on or before December 8, 2021
at a price of $5.00 per share. The Series DD warrants may be
exercised at any time on or before December 10, 2018 at a price of
$4.50 per share. The Series EE warrants may be exercised at any
time on or before December 10, 2018 at a price of $4.50 per share.
The Series FF warrants may be exercised at any time on or before
December 1, 2021 at a price of $3.90625 per
share.
K.
The Series GG
warrants may be exercised at any time on or after August 23, 2017
and on or before August 23, 2022 at a price of $3.00 per share. The
Series HH warrants may be exercised at any time on or before
February 16, 2022 at a price of $3.125 per
share.
L.
The Series II
warrants may be exercised at any time on or after September 14,
2017 and on or before September 14, 2022 at a price of $3.00 per
share. The Series JJ warrants may be exercised at any time on or
before March 8, 2022 at a price of $3.125 per
share.
M.
The Series KK
warrants may be exercised at any time on or after November 3, 2017
and on or before November 3, 2022 at a price of $3.035 per share.
The Series LL warrants may be exercised at any time on or before
April 30, 2022 at a price of $3.59375 per share.
32
N.
The Series MM
warrant are exercisable at a price of $1.86 per share at any time
on or before June 22, 2022.
O.
The Series NN
warrant are exercisable at a price of $2.52 per share at any time
on or before July 24, 2022.
P.
The Series OO
warrants may be exercised at any time on or before July 31, 2022 at
a price of $2.52 per share.
Q.
The Series PP
warrants may be exercised at any time on before February 23, 2023
at a price of $2.30 per share. The Series QQ warrants may be
exercised at any time on or before August 22, 2022 at a price of
$2.50 per share.
R.
The Series RR
warrants may be exercised at any time on or before October 30, 2022
at a price of $1.65 per share.
S.
The Series SS
warrants may be exercised at any time on or before December 18,
2022 at a price of $2.09 per share.
T.
The Series TT
warrants may be exercised at any time on or after August 6, 2018
and on or before February 5, 2023 at a price of $2.24 per
share.
U.
The Series UU
warrants may be exercised at any time on or after December 11, 2018
and on or before June 11, 2020 at a price of $2.80 per
share.
V.
The Series VV
warrants may be exercised at any time on or after January 2, 2019
and on or before January 2, 2024 at a price of $1.75 per share. The
Series WW warrants may be exercised at any time on or after January
2, 2019 and on or before June 28, 2023 at a price of $1.625 per
share.
33
MARKET FOR CEL-SCI’S COMMON STOCK
Our
common stock is publicly traded on the NYSE American under the
symbol “CVM”. The following table sets forth, for the
periods indicated, the high and low intraday sale prices of our
common stock as reported by the NYSE American.
|
|
HIGH
|
LOW
|
|
|
(1)
|
(1)
|
|
FY 2018
|
|
|
|
Fourth
Quarter (through August 17, 2018)
|
$1.29
|
$0.82
|
|
Third
Quarter (through June 30, 2018)
|
$3.66
|
$0.83
|
|
Second
Quarter (through March 31, 2018)
|
$2.50
|
$1.30
|
|
First
Quarter (through December 31, 2017)
|
$2.14
|
$1.60
|
|
|
|
|
|
FY 2017
|
|
|
|
Fourth
Quarter (through September 30, 2017)
|
$3.69
|
$1.57
|
|
Third
Quarter (through June 30, 2017)
|
$4.00
|
$1.50
|
|
Second
Quarter (through March 31, 2017)
|
$4.50
|
$1.75
|
|
First
Quarter (through December 31, 2016)
|
$7.75
|
$1.50
|
|
|
|
|
|
FY 2016
|
|
|
|
Fourth
Quarter (through September 30, 2016)
|
$13.50
|
$6.00
|
|
Third
Quarter (through June 30, 2016)
|
$15.00
|
$11.00
|
|
Second
Quarter (through March 31, 2016)
|
$16.50
|
$9.00
|
|
First
Quarter (through December 31, 2015)
|
$18.75
|
$9.00
|
(1)
Prices reflect a
25-for-1 reverse stock split which became effective on the NYSE
American on June 15, 2017.
As of
August 17, 2018, there were 24,021,058
outstanding shares of
our common stock outstanding held by approximately 750 holders of
record.
Holders
of common stock are entitled to receive dividends as may be
declared by the Board of Directors out of legally available funds
and, in the event of liquidation, to share pro rata in any
distribution of CEL-SCI’s assets after payment of
liabilities. The Board of Directors is not obligated to declare a
dividend. CEL-SCI has not paid any dividends on its common stock
and CEL-SCI does not have any current plans to pay any common stock
dividends.
The
provisions in CEL-SCI’s Articles of Incorporation relating to
CEL-SCI’s preferred stock would allow CEL-SCI’s
directors to issue preferred stock with rights to multiple votes
per share and dividend rights which would have priority over any
dividends paid with respect to CEL-SCI’s common
stock. The issuance of preferred stock with such rights
may make more difficult the removal of management, even if such
removal would be considered beneficial to shareholders generally,
and will have the effect of limiting shareholder participation in
certain transactions such as mergers or tender offers if such
transactions are not favored by incumbent management.
34
The
market price of CEL-SCI’s common stock, as well as the
securities of other biopharmaceutical and biotechnology companies,
have historically been highly volatile, and the market has from
time to time experienced significant price and volume fluctuations
that are unrelated to the operating performance of particular
companies. Factors such as fluctuations in CEL-SCI’s
operating results, announcements of technological innovations or
new therapeutic products by CEL-SCI or its competitors,
governmental regulation, developments in patent or other
proprietary rights, public concern as to the safety of products
developed by CEL-SCI or other biotechnology and pharmaceutical
companies, and general market conditions may have a significant
effect on the market price of CEL-SCI’s common
stock.
PLAN OF DISTRIBUTION
CEL-SCI
may sell shares of its common stock, preferred stock, convertible
preferred stock, rights, or warrants, units consisting of any of
the foregoing, as well as any of these securities issuable upon the
exercise of warrants in and/or outside the United
States: (i) through underwriters, placement agents, or
dealers; (ii) directly to a limited number of purchasers or to a
single purchaser; or (iii) through agents. The
applicable prospectus supplement with respect to the offered
securities will set forth the name or names of any underwriters or
agents, if any, the purchase price of the offered securities and
the proceeds to CEL-SCI from such sale, any delayed delivery
arrangements, any underwriting discounts, commissions, and other
items constituting underwriters' or placement agents’
compensation, the public offering price and any discounts or
concessions allowed or reallowed or paid to dealers and any
compensation paid to an underwriter or a placement
agent. The public offering price and any discounts or
concessions allowed or reallowed or paid to dealers may be changed
from time to time.
Notwithstanding the
above, the maximum commission or discount to be received by any
NASD member or independent broker-dealer will not be greater than
10% in connection with the sale of any securities offered by means
of this prospectus or any related prospectus supplement, exclusive
of any non-accountable expense allowance. Any securities
issued by CEL-SCI to any FINRA member or independent broker-dealer
in connection with an offering of CEL-SCI’s securities will
be considered underwriting compensation and may be restricted from
sale, transfer, assignment, or hypothecation for a number of months
following the effective date of the offering, except to officers or
partners (not directors) of any underwriter or member of a selling
group and/or their officers or partners.
CEL-SCI’s
securities may be sold:
●
At a fixed
price.
●
As the result of
the exercise of warrants or rights, or the conversion of preferred
shares, at fixed or varying prices, as determined by the terms of
the warrants, rights or convertible securities.
●
At varying prices
in at the market offerings.
●
In privately
negotiated transactions, at fixed prices which may be changed, at
market prices prevailing at the time of sale, at prices related to
such prevailing market prices or at negotiated prices.
If
underwriters are used in the sale, the offered securities will be
acquired by the underwriters for their own account and may be
resold from time to time in one or more transactions, including
negotiated transactions, at a fixed public offering price or at
varying prices determined at the time of sale. The
securities may be offered to the public either through underwriting
syndicates represented by one or more managing underwriters or
directly by one or more firms acting as
underwriters. The underwriter or underwriters with
respect to a particular underwritten offering of securities will be
named in the prospectus supplement relating to such offering and,
if an underwriting syndicate is used, the managing underwriter or
underwriters will be set forth on the cover of such prospectus
supplement. Unless otherwise set forth in the prospectus
supplement, the obligations of the underwriters to purchase the
offered securities will be subject to conditions precedent and the
underwriters may be obligated to purchase all the offered
securities if any are purchased.
35
If
dealers are utilized in the sale of offered securities in respect
of which the prospectus supplement is delivered, CEL-SCI
will sell the offered securities to the dealers as
principals. The dealers may then resell the offered
securities to the public at varying prices to be determined by the
dealers at the time of resale. The names of the dealers
and the terms of the transaction will be set forth in the
prospectus supplement relating to the securities sold to the
dealers.
If an
agent is used in an offering, the agent will be named, and the
terms of the agency will be set forth, in the prospectus
supplement. Unless otherwise indicated in the prospectus
supplement, an agent will act on a best efforts basis for the
period of its appointment.
The
securities may be sold directly by CEL-SCI to institutional
investors or others, who may be deemed to be underwriters within
the meaning of the Securities Act of 1933 with respect to any
resale of the securities purchased by the institutional
investors. The terms of any of the sales, including the
terms of any bidding or auction process, will be described in the
applicable prospectus supplement.
CEL-SCI
may permit agents or underwriters to solicit offers to purchase its
securities at the public offering price set forth in a prospectus
supplement pursuant to a delayed delivery arrangement providing for
payment and delivery on the date stated in the prospectus
supplement. Any delayed delivery contract will contain
definite fixed price and quantity terms. The obligations
of any purchaser pursuant to a delayed delivery contract will not
be subject to any market outs or other conditions other than the
condition that the delayed delivery contract will not violate
applicable law. In the event the securities underlying
the delayed delivery contract are sold to underwriters at the time
of performance of the delayed delivery contract, those securities
will be sold to those underwriters. Each delayed
delivery contract shall be subject to CEL-SCI’s
approval. CEL-SCI will pay the commission indicated in
the prospectus supplement to underwriters or agents soliciting
purchases of securities pursuant to delayed delivery arrangements
accepted by CEL-SCI.
Notwithstanding the
above, while prospectus supplements may provide specific offering
terms, or add to or update information contained in this
prospectus, any fundamental changes to the offering terms will be
made by means of a post-effective amendment.
Agents,
dealers and underwriters may be entitled under agreements entered
into with CEL-SCI to indemnification from CEL-SCI against certain
civil liabilities, including liabilities under the Securities Act,
or to contribution with respect to payments made by such agents,
dealers or underwriters.
DESCRIPTION OF SECURITIES
Common Stock
CEL-SCI
is authorized to issue 600,000,000 shares of common stock, (the
"common stock"). Holders of common stock are each
entitled to cast one vote for each share held of record on all
matters presented to shareholders. Cumulative voting is
not allowed; hence, the holders of a majority of the outstanding
common stock can elect all directors.
Holders
of common stock are entitled to receive such dividends as may be
declared by the Board of Directors out of funds legally available
therefor and, in the event of liquidation, to share pro rata in any
distribution of CEL-SCI's assets after payment of
liabilities. The board is not obligated to declare a
dividend. It is not anticipated that dividends will be
paid in the foreseeable future.
Holders
of common stock do not have preemptive rights to subscribe to
additional shares if issued by CEL-SCI. There is no
conversion, redemption, sinking fund or similar provision regarding
the common stock. All of the outstanding shares of
common stock are fully paid and non-assessable.
36
Preferred Stock
CEL-SCI
is authorized to issue up to 200,000 shares of preferred
stock. CEL-SCI's Articles of Incorporation provide that
the Board of Directors has the authority to divide the preferred
stock into series and, within the limitations provided by Colorado
statute, to fix by resolution the voting power, designations,
preferences, and relative participation, special rights, and the
qualifications, limitations or restrictions of the shares of any
series so established. As the Board of Directors has
authority to establish the terms of, and to issue, the preferred
stock without shareholder approval, the preferred stock could be
issued to defend against any attempted takeover of
CEL-SCI. As of July 27, 2018, no shares of preferred
stock were outstanding.
Rights Agreement
In
November 2007, we declared a dividend of one Series A Right and one
Series B Right, or collectively the Rights, for each share of our
common stock which was outstanding on November 9, 2007. When the
Rights become exercisable, each Series A Right will entitle the
registered holder, subject to the terms of a Rights Agreement, to
purchase from us one share of our common stock at a price equal to
20% of the market price of our common stock on the exercise date,
although the price may be adjusted pursuant to the terms of the
Rights Agreement. If after a person or group of affiliated persons
has acquired 15% or more of our common stock or following the
commencement of a tender offer for 15% or more of our outstanding
common stock (i) we are acquired in a merger or other business
combination and we are not the surviving corporation, (ii) any
person consolidates or merges with us and all or part of our common
shares are converted or exchanged for securities, cash or property
of any other person, or (iii) 50% or more of our consolidated
assets or earning power are sold, proper provision will be made so
that each holder of a Series B Right will thereafter have the right
to receive, upon payment of the exercise price of $100 (subject to
adjustment), that number of shares of common stock of the acquiring
company which at the time of such transaction has a market value
that is twice the exercise price of the Series B
Right.
The
description and terms of the Rights are set forth in a Rights
Agreement between the Company and Computershare Trust Company,
N.A., as Rights Agent.
Distribution of Rights
Initially,
stockholders will not receive separate certificates for the Rights
as the Rights will be represented by outstanding common stock
certificates. Until the exercise date, the Rights cannot be bought,
sold or otherwise traded separately from the common stock.
Certificates for common stock carry a notation that indicates that
Rights are attached to the common stock and incorporate the terms
of the Rights Agreement.
Separate
certificates representing the Rights will be distributed as soon as
practicable after the earliest to occur of:
●
15 business days
following a public announcement that a person or group of
affiliated or associated persons has acquired beneficial ownership
of 15% or more of our outstanding common stock, or
●
15 business days
(or such later date as may be determined by action of our board of
directors prior to such time as any person or group of affiliated
persons has acquired 15% or more of our common stock) following the
commencement of, or announcement of an intention to make, a tender
offer or exchange offer the consummation of which would result in
the beneficial ownership by a person or group of 15% or more of our
outstanding common stock.
37
The
earlier of such dates described above is called the
“distribution date.”
Until
the distribution date (or earlier redemption or expiration of the
Rights), the surrender for transfer of any certificates for common
stock outstanding as of the record date, even without such
notation, will also constitute the transfer of the Rights
associated with the common stock represented by such certificate.
As soon as practicable following the distribution date, separate
certificates evidencing the Rights will be mailed to holders of
record of the common stock as of the close of business on the
distribution date and such separate right certificates alone will
evidence the Rights.
Exercise and Expiration
The
holders of the Rights are not required to take any action until the
Rights become exercisable. The Rights are not exercisable until the
distribution date. Holders of the Rights will be notified by us
that the Rights have become exercisable. The Rights will expire on
October 30, 2020, unless the expiration date is extended or unless
the Rights are earlier redeemed by us as described
below.
Redemption
At any
time prior to the distribution date, our board of directors may
redeem the Rights in whole, but not in part, at a price of $0.0001
per Right. Subject to the foregoing, the redemption of the Rights
may be made effective at such time, on such basis and with such
conditions as our board of directors in its sole discretion may
establish. Immediately upon any redemption of the Rights, the right
to exercise the Rights will terminate and the only entitlement of
the holders of Rights will be to receive the redemption
price.
Exchange Option
At any
time after a person or group of affiliated persons has acquired 15%
or more of our common stock or following the commencement of a
tender offer for 15% or more of our outstanding common stock, and
prior to the acquisition by such person of 50% or more of the
outstanding common stock, our board of directors may exchange the
Rights (other than Rights owned by such person or group which have
become void), in whole or in part, at an exchange ratio of one
share of common stock per Right (subject to
adjustment).
Other Provisions
The
terms of the Rights may be amended by our board of directors
without the consent of the holders of the Rights, except that from
and after such time a person or group of affiliated persons has
acquired 15% or more of our common stock no such amendment may
adversely affect the interests of the holders of the
Rights.
Until a
Right is exercised, the holder of the Right, as such, will not have
any rights as a stockholder, including, without limitation, the
right to vote or to receive dividends.
The
Rights may have certain anti-takeover effects. The Rights will
cause substantial dilution to a person or group that attempts to
acquire us on terms not approved by our board of directors.
However, the Rights should not interfere with any merger or other
business combination approved by a majority of our board of
directors because the Rights may be redeemed by us at any time
prior to the distribution date. Thus, the Rights are intended to
encourage persons who may seek to acquire control of us to initiate
such an acquisition through negotiations with our board of
directors. However, the effect of the Rights may be to discourage a
third party from making a partial tender offer or otherwise
attempting to obtain a substantial position in the equity
securities of, or seeking to obtain control of, us. To the extent
any potential acquisition is deterred by the Rights, the Rights may
have the effect of preserving incumbent management in
office.
38
Attorneys’ Fees in Stockholder Actions
Our
bylaws include a fee-shifting provision in Article X for
stockholder claims. Article X provides that in the event that any
stockholder initiates or asserts a claim against us, or any of our
officers or directors, including any derivative claim or claim
purportedly filed on our behalf, and the stockholder does not
obtain a judgment on the merits that substantially achieves, in
substance and amount, the full remedy sought, then the stockholder
will be obligated to reimburse us and any of our officers or
directors named in the action, for all fees, costs and expenses of
every kind and description, including but not limited to all
reasonable attorneys’ fees and other litigation expenses,
that we or our officers or directors who were named in the action
may incur in connection with such claim.
Our
fee-shifting provision is not limited to specific types of actions,
but is rather potentially applicable to the fullest extent
permitted by law. There are several types of remedies that a
stockholder may seek in connection with an action or proceeding
against us, including declaratory or injunctive relief, or monetary
damages. If a stockholder is not successful in obtaining a judgment
that substantially achieves in substance, such as in the case of a
claim for declaratory or injunctive relief, or amount, such as in
the case of a claim for monetary damages, our and our
officers’ and directors’ litigation expenses may be
shifted to the stockholder.
Fee-shifting
provisions are relatively new and untested. The case law and
potential legislative action on fee shifting bylaws are evolving
and there exists considerable uncertainty regarding the validity
of, and potential judicial and legislative responses to, such
bylaws. For example, it is unclear whether our ability to invoke
our fee-shifting bylaw in connection with claims under the federal
securities laws, including claims related to this offering, would
be pre-empted by federal law. Similarly, it is unclear how courts
might apply the standard that a stockholder must obtain a judgment
that substantially achieves, in substance and amount, the full
remedy sought. The application of our fee shifting bylaw in
connection with such claims, if any, will depend in part on future
developments of the law. We cannot assure you that we will or will
not invoke our fee-shifting bylaw in any particular dispute,
including any claims related to this offering.
If a
stockholder that brings any such claim is unable to obtain the
required judgment, the attorneys’ fees and other litigation
expenses that might be shifted to such a stockholder are
potentially significant. This fee-shifting bylaw, therefore, may
dissuade or discourage stockholders (and their attorneys) from
initiating lawsuits or claims against us or our directors and
officers. In addition, it may impact the fees, contingency or
otherwise, required by potential plaintiffs’ attorneys to
represent our stockholders or otherwise discourage
plaintiffs’ attorneys from representing our stockholders at
all. As a result, this bylaw may limit the ability of stockholders
to affect the management and direction of our company, particularly
through litigation or the threat of litigation.
Warrants Held by Private Investors
See
“Comparative Share Data” for information concerning
CEL-SCI’s outstanding options and warrants.
Transfer Agent
Computershare,
Inc., of Denver, Colorado, is the transfer agent for CEL-SCI's
common stock.
39
EXPERTS
The
financial statements as of September 30, 2017 and 2016 and for the
years then ended incorporated by reference in this Prospectus have
been so incorporated in reliance on the report of BDO USA, LLP, an
independent registered public accounting firm, (the report on the
financial statements contains an explanatory paragraph regarding
the Company's ability to continue as a going concern) incorporated
herein by reference, given on the authority of said firm as experts
in auditing and accounting.
INDEMNIFICATION
CEL-SCI's bylaws
authorize indemnification of a director, officer, employee or agent
of CEL-SCI against expenses incurred by him in connection with any
action, suit, or proceeding to which he is named a party by reason
of his having acted or served in such capacity, except for
liabilities arising from his own misconduct or negligence in
performance of his duty. In addition, even a director,
officer, employee, or agent of CEL-SCI who was found liable for
misconduct or negligence in the performance of his duty may obtain
such indemnification if, in view of all the circumstances in the
case, a court of competent jurisdiction determines such person is
fairly and reasonably entitled to
indemnification. Insofar as indemnification for
liabilities arising under the Securities Act of 1933 may be
permitted to directors, officers, or persons controlling CEL-SCI
pursuant to the foregoing provisions, CEL-SCI has been informed
that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Act
and is therefore unenforceable.
ADDITIONAL INFORMATION
CEL-SCI
is subject to the requirements of the Securities Exchange Act of
l934 and is required to file reports, proxy statements and other
information with the Securities and Exchange
Commission. Copies of any such reports, proxy statements
and other information filed by CEL-SCI can be read and copied at
the Commission’s Public Reference Room at 100 F Street, N.E.,
Washington, D.C., 20549. The public may obtain
information on the operation of the Public Reference Room by
calling the Commission at 1-800-SEC-0330. The Commission
maintains an Internet site that contains reports, proxy and
information statements, and other information regarding
CEL-SCI. The address of that site is
http://www.sec.gov.
CEL-SCI
will provide, without charge, to each person to whom a copy of this
prospectus is delivered, including any beneficial owner, upon the
written or oral request of such person, a copy of any or all of the
documents incorporated by reference below (other than exhibits to
these documents, unless the exhibits are specifically incorporated
by reference into this prospectus). Requests should be directed
to:
CEL-SCI
Corporation
8229
Boone Blvd., #802
Vienna,
Virginia 22182
(703)
506-9460
40
INCORPORATION OF DOCUMENTS BY REFERENCE
We
incorporate by reference the filed documents listed below, except
as superseded, supplemented or modified by this Registration
Statement, and any future filings we will make with the SEC under
Sections 13(a), 13(c), 14 or 15(d) of the Exchange
Act:
●
our Annual Report on Form 10-K for the
fiscal year ended September 30, 2017;
●
our Quarterly
Reports on Form 10-Q for the period ended December 31, 2017, March
31, 2018 and June 30, 2018;
●
our Current Reports
on Form 8-K filed with the SEC on October 6, 2017, November 3,
2017, November 22, 2017, December 1, 2017, December
12, 2017, December 20, 2017, December 21,
2017, January 4, 2018, January 16, 2018, February 6, 2018, February
23, 2018, April 5, 2018, April 26, 2018, May 21, 2018, June 13,
2018, June 25, 2018, June 28, 2018, June 29, 2018, July 10,
2018, July 13, 2018 and August 17,
2018;
●
our
Definitive Proxy Statement relating to our Annual Shareholders'
Meeting to be held on September 20, 2018;
●
the description of
our common stock in our Registration Statement on Form 8-A filed
with the SEC on July 2, 1996 and all amendments and reports
updating that description; and
●
the description of
our Series S warrants contained in our Registration Statement on
Form 8-A filed with the SEC on January 3, 2014 and all amendments
and reports updating that description.
All
documents filed with the Commission by CEL-SCI pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the
date of this prospectus and prior to the termination of this
offering shall be deemed to be incorporated by reference into this
prospectus and to be a part of this prospectus from the date of the
filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference
shall be deemed to be modified or superseded for the purposes of
this prospectus to the extent that a statement contained in this
prospectus or in any subsequently filed document which also is or
is deemed to be incorporated by reference in this prospectus
modifies or supersedes such statement. Such statement so
modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this
prospectus.
Investors are
entitled to rely upon information in this prospectus or
incorporated by reference at the time it is used by CEL-SCI to
offer and sell securities, even though that information may be
superseded or modified by information subsequently incorporated by
reference into this prospectus.
CEL-SCI
has filed with the Securities and Exchange Commission a
Registration Statement under the Securities Act of l933, as
amended, with respect to the securities offered by this
prospectus. This prospectus does not contain all of the
information set forth in the Registration Statement. For
further information with respect to CEL-SCI and such securities,
reference is made to the Registration Statement and to the exhibits
filed with the Registration Statement. Statements
contained in this prospectus as to the contents of any contract or
other documents are summaries which are not necessarily complete,
and in each instance reference is made to the copy of such contract
or other document filed as an exhibit to the Registration
Statement, each such statement being qualified in all respects by
such reference. The Registration Statement and related
exhibits may also be examined at the Commission’s internet
site.
No dealer
salesman or other person has been authorized to give any
information or to make any representations, other than those
contained in this prospectus. Any information or
representation not contained in this prospectus must not be relied
upon as having been authorized by CEL-SCI. This
prospectus does not constitute an offer to sell, or a solicitation
of an offer to buy, the securities offered hereby in any state or
other jurisdiction to any person to whom it is unlawful to make
such offer or solicitation. Neither the delivery of this
prospectus nor any sale made hereunder shall, under any
circumstances, create an implication that there has been no change
in the affairs of CEL-SCI since the date of this
prospectus.
41
TABLE OF CONTENTS
|
|
|
|
Page
|
|
|
|
|
|
|
Prospectus
Summary
|
|
|
2
|
|
Forward
Looking Statements
|
|
|
9
|
|
Risk
Factors
|
|
|
10
|
|
Comparative
Share Data
|
|
|
30
|
|
Market
for CEL-SCI’s Common Stock
|
|
|
34
|
|
Plan of
Distribution
|
|
|
35
|
|
Description
of Securities
|
|
|
36
|
|
Experts
|
|
|
40
|
|
Indemnification
|
|
|
40
|
|
Additional
Information
|
|
|
40
|
Common
Stock
CEL-SCI
CORPORATION
PROSPECTUS
42
PART II
Information
Not Required in Prospectus
Item 14. Other
Expenses of Issuance and Distribution
|
SEC
Filing Fee
|
$12,450
|
|
Legal
Fees and Expenses
|
30,000
|
|
Accounting
Fees and Expenses
|
15,000
|
|
Miscellaneous
Expenses
|
550
|
|
TOTAL
|
$58,000
|
All expenses other
than the SEC filing fees are
estimated.
Item 15. Indemnification of
Officers and Directors.
It
pursuant to Section 7-109-102 of the Colorado Revised Statutes and
CEL-SCI's Bylaws, CEL-SCI may indemnify any and all
of its officers, directors, employees or agents or former officers,
directors, employees or agents, against expenses actually and
necessarily incurred by them, in connection with the defense of any
legal proceeding or threatened legal proceeding, except as to
matters in which such persons shall be determined to not have acted
in good faith and in the best interest of CEL-SCI.
Item 16. Exhibits
|
3(a)
|
|
Articles of
Incorporation
|
|
Incorporated
by reference to Exhibit 3(a) of CEL-SCI's combined Registration
Statement on Form S-1 and Post-Effective Amendment ("Registration
Statement"), Registration Nos. 2-85547-D and 33-7531.
|
|
|
|
|
|
|
|
3(b)
|
|
Amended
Articles
|
|
Incorporated
by reference to Exhibit 3(a) of CEL-SCI's Registration Statement on
Form S-1, Registration Nos. 2-85547-D and 33-7531.
|
|
|
|
|
|
|
|
3(c)
|
|
Amended
Articles (Name change only)
|
|
Filed
as Exhibit 3(c) to CEL-SCI's Registration Statement on Form S-1
Registration Statement (No. 33-34878).
|
|
|
|
|
|
|
|
3(d)
|
|
Bylaws
|
|
Incorporated
by reference to Exhibit 3(b) of CEL-SCI's Registration Statement on
Form S-1, Registration Nos. 2-85547-D and 33-7531.
|
|
|
|
|
|
|
|
|
Amended
Bylaws
|
|
Incorporated
by reference to Exhibit 3(ii) of CEL-SCI’s report on Form 8-K
dated March 16, 2015.
|
|
|
|
|
|
|
|
|
|
Shareholders Rights
Agreement, as Amended
|
|
Incorporated
by reference to Exhibit 4 filed with CEL-SCI’s 10-K
report for the year ended September 30, 2015.
|
|
|
|
|
|
|
|
|
|
Incentive Stock
Option Plan
|
|
Incorporated
by reference to Exhibit 4 (b) filed on September 25, 2012 with the
Company’s registration statement on Form S¬8 (File
number 333-184092).
|
|
|
|
|
|
|
|
|
|
Non-Qualified Stock
Option Plan
|
|
Incorporated
by reference to Exhibit 4 (b) filed on August 19, 2014 with the
Company’s registration statement on Form S¬8 (File
number 333-198244).
|
|
|
|
|
|
|
|
|
|
Stock
Bonus Plan
|
|
Incorporated
by reference to Exhibit 4 (d) filed on September 25, 2012 with the
Company’s registration statement on Form S¬8 (File
number 333-184092).
|
|
|
|
|
|
|
|
|
|
Stock
Compensation Plan
|
|
Incorporated
by reference to Exhibit 4 (e) filed on September 25, 2012 with the
Company’s registration statement on Form S¬8 (File
number 333-184092).
|
|
|
|
|
|
|
|
|
4(f)
|
|
2014
Incentive Stock Bonus Plan
|
|
Incorporated
by reference to Exhibit 4 (c) filed with the Company’s
registration statement on Form S-8 (333-198244).
|
|
|
|
|
|
|
|
|
Legal
Opinion
|
|
(1)
|
|
|
|
|
|
|
|
|
|
First
Amendment to Development Supply and Distribution Agreement
with Orient Europharma.
|
|
Incorporated
by reference to Exhibit 10(m) filed with CEL-SCI’s 10-K
report for the year ended September 30, 2010.
|
|
|
|
|
|
|
|
|
|
Exclusive License
and Distribution Agreement with Teva Pharmaceutical
Industries Ltd.
|
|
Incorporated
by reference to Exhibit 10(n) filed with CEL-SCI’s 10-K
report for the year ended September 30, 2010.
|
|
|
|
|
|
|
|
|
|
Lease
Agreement
|
|
Incorporated
by reference to Exhibit 10(o) filed with CEL-SCI’s 10-K
report for the year ended September 30, 2010.
|
43
|
10(p)
|
|
Licensing Agreement
with Byron Biopharma
|
|
Incorporated
by reference to Exhibit 10(i) of CEL-SCI’s report on
Form 8-K dated March 27, 2009
|
|
|
|
|
|
|
|
10(z)
|
|
Development, Supply
and Distribution Agreement with Orient Europharma
|
|
Incorporated
by reference to Exhibit 10(z) filed with CEL-SCI’s
report on Form 10-K for the year ended September 30,
2003.
|
|
|
|
|
|
|
|
10(ii)
|
|
Securities Purchase Agreement and
the form of the Series R warrant, which is
an exhibit to the Securities Purchase
Agreement
|
|
Incorporated
by reference to Exhibit 10(ii) of CEL-SCI’s report on
Form 8-K dated December 5, 2012.
|
|
|
|
|
|
|
|
|
Underwriting
Agreement, together with the form of Series S warrant which is an
exhibit to the underwriting agreement
|
|
Incorporated
by reference to Exhibit 1.1 of CEL-SCI’s report on Form 8-K
dated October 8, 2013.
|
|
|
|
|
|
|
|
|
|
Underwriting
Agreement, together with the form of Series S warrant which is an
exhibit to the Underwriting Agreement.
|
|
Incorporated by
reference to Exhibit 1.1 of CEL-SCI’s report on Form 8-K
dated December 19, 2013.
|
|
|
|
|
|
|
|
|
|
Underwriting
Agreement, together with the form of Series T warrant which is an
exhibit to the warrant agent agreement
|
|
Incorporated by
reference to Exhibit 1.1 of CEL-SCI’s report on Form 8-K
dated April 15, 2014.
|
|
|
|
|
|
|
|
|
|
Underwriting
Agreement, together with the form of Series S warrant which is an
exhibit to the warrant agent agreement
|
|
Incorporated by
reference to Exhibit 1.1 of CEL-SCI’s report on Form 8-K
dated October 23, 2014.
|
|
|
|
|
|
|
|
|
|
Assignment and
Assumption Agreement with Teva Pharmaceutical Industries, Ltd. and
GCP Clinical Studies, Ltd.
|
|
Incorporated by
reference to Exhibit 10(rr) of CEL-SCI’s report on Form
10-K/A report for the year ended September 30, 2014 dated
April 17, 2015.
|
|
|
|
|
|
|
|
|
|
Service
Agreement with GCP Clinical Studies, Ltd., together with Amendment
1 thereto*
|
|
Incorporated by
reference to Exhibit 10(ss) of CEL-SCI’s first amendment to
its Form 10-K report for the year ended September 30, 2014
dated April 17, 2015.
|
|
|
|
|
|
|
|
|
|
Joinder
Agreement with PLIVA Hrvatska d.o.o.
|
|
Incorporated by
reference to Exhibit 10(tt) of CEL-SCI’s first amendment to
its Form 10-K report for the year ended September 30, 2014
dated April 17, 2015.
|
44
|
|
Master
Service Agreement with Ergomed Clinical Research,
Ltd., and Clinical Trial Orders thereunder
|
|
Incorporated by
reference to Exhibit 10(uu) of CEL-SCI’s first amendment to
its Form 10-K report for the year ended September 30, 2014
dated April 17, 2015.
|
|
|
|
|
|
|
|
|
|
Co-Development and
Revenue Sharing Agreement with Ergomed Clinical Research Ltd.,
dated April 19, 2013, as amended
|
|
Incorporated by
reference to Exhibit 10(vv) of CEL-SCI’s first amendment to
its Form 10-K report for the year ended September 30, 2014
dated April 17, 2015.
|
|
|
|
|
|
|
|
|
|
Co-Development and
Revenue Sharing Agreement II: Cervical Intraepithelial
Neoplasia in HIV/HPV co-infected women, with Ergomed Clinical
Research Ltd., dated October 10, 2013, as amended
|
|
Incorporated by
reference to Exhibit 10(ww) of CEL- first amendment to its Form
10-K report for the year ended September 30, 2014 dated April
17, 2015.
|
|
|
|
|
|
|
|
|
|
Co-Development
and Revenue Sharing Agreement III: Anal warts and anal
intraepithelial neoplasia in HIV/HPV co-infected patients, with
Ergomed Clinical Research Ltd., dated October 24, 2013
|
|
Incorporated
by reference to Exhibit 10(xx) of CEL-SCI’s first amendment
to its Form 10-K report for the year ended September 30, 2014
dated April 17, 2015.
|
|
|
|
|
|
|
|
|
|
Master
Services Agreement with Aptiv Solutions, Inc.
|
|
Incorporated by
reference to Exhibit 10(yy) of CEL-SCI’s first amendment to
its Form 10-K report for the year ended September 30, 2014
dated April 17, 2015.
|
|
|
|
|
|
|
|
|
|
Project
Agreement Number 1 with Aptiv Solutions, Inc. together with
Amendments 1 and 2 thereto*
|
|
Incorporated by
reference to Exhibit 10(zz) of CEL-SCI’s first amendment to
its Form 10-K report for the year ended September 30, 2014
dated April 17, 2015.
|
|
|
|
|
|
|
|
|
|
Second
Amendment to Development Supply and Distribution Agreement with
Orient Europharma
|
|
Incorporated by
reference to Exhibit 10(aaa) of CEL-SCI’s first amendment to
its Form 10-K report for the year ended September 30, 2014
dated April 17, 2015.
|
45
|
|
Warrant
Agent Agreement (as amended), Series V warrants
|
|
Incorporated by
reference to Exhibit 10 (ccc) of CEL-SCI’s report on Form 8-K
filed on May 29, 2015.
|
|
|
|
|
|
|
|
|
|
Assignment of
Proceeds and Investment Agreement between CEL-SCI Corporation and
Lake Whillans Vehicle 1.
|
|
Incorporated by
reference to Exhibit 10 (ddd) of CEL-SCI’s report on Form 8-K
filed on October 16, 2015.
|
|
|
|
|
|
|
|
|
|
Warrant
Agent Agreement, Series W warrants
|
|
Incorporated by
reference to Exhibit 10 (eee) of CEL-SCI’s report on Form 8-K
filed on October 23, 2015.
|
|
|
|
|
|
|
|
|
|
Securities Purchase
Agreement
|
|
Incorporated by
reference to Exhibit 10(jjj) of CEL-SCI’s report on Form 8-K
dated May 19, 2016.
|
|
|
|
|
|
|
|
|
|
Securities Purchase
Agreement
|
|
Incorporated by
reference to Exhibit 10(kkk) of CEL-SCI’s report on Form 8-K
dated August 24, 2016.
|
|
|
|
|
|
|
|
|
|
Termination
Agreement with Maximilian de Clara
|
|
Incorporated by
reference to Exhibit 10(lll) of CEL-SCI’s report on Form 8-K
dated September 2, 2016.
|
|
|
|
|
|
|
|
|
|
Employment
Agreement with Geert Kersten (2016-2019)
|
|
Incorporated by
reference to Exhibit 10(mmm) of CEL-SCI’s report on Form 8-K
dated September 2, 2016.
|
|
|
|
|
|
|
|
|
|
Employment
Agreement with Patricia Prichep (2016-2019)
|
|
Incorporated by
reference to Exhibit 10(nnn) of CEL-SCI’s report on Form 8-K
dated September 2, 2016.
|
|
|
|
|
|
|
|
|
|
Employment
Agreement with Eyal Taylor (2016-2019)
|
|
Incorporated by
reference to Exhibit 10(ooo) of CEL-SCI’s report on Form 8-K
dated September 2, 2016.
|
|
|
|
|
|
|
|
|
|
Securities Purchase
Agreement
|
|
Incorporated by
reference to Exhibit 10(ppp) of CEL-SCI’s report on Form 8-K
dated December 1, 2016.
|
46
|
|
Securities Purchase
Agreement
|
|
Incorporated by
reference to Exhibit 10(qqq) of CEL-SCI’s report on Form 8-K
dated February 16, 2017.
|
|
|
|
|
|
|
|
|
|
Securities Purchase
Agreement
|
|
Incorporated by
reference to Exhibit 10(rrr) of CEL-SCI’s report on Form 8-K
dated March 8, 2017.
|
|
|
|
|
|
|
|
|
|
Securities Purchase
Agreement
|
|
Incorporated by
reference to Exhibit 10(sss) of CEL-SCI’s report on Form 8-K
dated April 30, 2017.
|
|
|
|
|
|
|
|
|
|
Securities
Purchase Agreement (sale of 100,000 shares to private investor,
plus Series OO warrants).
|
|
Incorporated by
reference to Exhibit 10(ttt) of CEL-SCI’s report on Form 8-K
dated July 27, 2017.
|
|
|
|
|
|
|
|
|
|
Securities Purchase
Agreement with Ergomed
|
|
Incorporated by
reference to Exhibit 10(uuu) of CEL-SCI’s report on Form 8-K
dated August 17, 2017.
|
|
|
|
|
|
|
|
|
|
Securities Purchase
Agreement
|
|
Incorporated by
reference to Exhibit 10(vvv) of CEL-SCI’s report on Form 8-K
dated August 22, 2017.
|
|
|
|
|
|
|
|
|
10
(www)
|
|
Amendment No. 1 to
Assignment of Proceeds and Investment Agreement
|
|
Incorporated by
reference to Exhibit 10(www) of CEL-SCI’s report on Form 8-K
dated November 2, 2017.
|
|
|
|
|
|
|
|
|
Amendment to
Convertible Promissory Notes
|
|
Incorporated by
reference to Exhibit 10(xxx) of CEL-SCI’s registration
statement on Form S-1 dated January 5, 2018.
|
|
|
|
|
|
|
|
|
|
Securities Purchase
Agreement with Ergomed
|
|
Incorporated by
reference to Exhibit 10(zzz) of CEL-SCI’s report on Form 8-K
dated January 1, 2018.
|
|
|
|
|
|
|
|
|
|
Securities Purchase
Agreements (December 2017 Financing)
|
|
Incorporated by
reference to Exhibit 10.1 of CEL-SCI’s registration statement
on Form S-1 dated January 5, 2018.
|
47
|
|
Securities Purchase
Agreements (February 2018
Financing)
|
|
Incorporated by
reference to Exhibit 10.1 of CEL-SCI’s registration statement
on Form S-1 dated February 14, 2018.
|
||
|
|
|
|
|
|
|
|
|
Securities Purchase
Agreement with Ergomed
|
|
Incorporated by
reference to Exhibit 10.3 of CEL-SCI’s report on Form 8-K
dated May 21, 2018.
|
||
|
|
|
|
|
|
|
|
|
Securities Purchase
Agreement
|
|
Incorporated by
reference to Exhibit 10.4 of CEL-SCI’s report on Form 8-K
dated June 29, 2018.
|
||
|
|
|
|
|
|
|
|
|
Consent
of Hart & Hart, LLC
|
|
(1)
|
||
|
|
|
|
|
|
|
|
|
Consent
of BDO USA, LLP
|
|
|
||
* Portions of this exhibit have been omitted
pursuant to a request for confidential treatment filed with the
Commission under Rule 24b-2 of the Securities Exchange Act of 1934.
The omitted confidential material has been filed separately with
the Commission. The location of the omitted confidential
information is indicated in the exhibit with asterisks
(*)
(1)
Filed with original
registration statement.
Item
17. Undertakings.
The
undersigned registrant hereby undertakes:
(1) To
file, during any period in which offers or sales are being made, a
post-effective amendment to this registration
statement.
(i) To
include any prospectus required by Section l0(a)(3) of the
Securities Act;
(ii) To
reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the registration statement;
(iii) To
include any material information with respect to the plan of
distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement, including (but not limited to) any addition or deletion
of a managing underwriter.
(2) That,
for the purpose of determining any liability under the Securities
Act of l933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To
remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
Insofar
as indemnification for liabilities arising under the Securities Act
of l933 (the “Act”) may be permitted to directors,
officers and controlling persons of the Registrant, the Registrant
has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore,
unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the successful defense
of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of
whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication
of such issue.
48
POWER OF ATTORNEY
The
registrant and each person whose signature appears below hereby
authorizes the agent for service named in this registration
statement, with full power to act alone, to file one or more
amendments (including post-effective amendments) to this
registration statement, which amendments may make such changes in
this registration statement as such agent for service deems
appropriate, and the Registrant and each such person hereby
appoints such agent for service as attorney-in-fact, with full
power to act alone, to execute in the name and in behalf of the
Registrant and any such person, individually and in each capacity
stated below, any such amendments to this registration
statement.
SIGNATURES
Pursuant to the
requirements of the Securities Act of l933, the Registrant
certifies that it has reasonable grounds to believe that it meets
all the requirements for filing on Form S-3 and has duly caused
this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Vienna,
State of Virginia, on the 20th day of August
2018.
|
|
CEL-SCI
CORPORATION
|
|
|
|
|
|
|
|
|
Date
|
By:
|
/s/ Geert
Kersten
|
|
|
|
|
Geert Kersten,
Chief Executive, Financial and
|
|
|
|
|
Accounting
Officer
|
|
Pursuant to the
requirements of the Securities Act of l933, this registration
statement has been signed by the following persons in the
capacities and on the dates indicated.
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
|
|
/s/ Geert
Kersten
|
|
Chief Executive,
Financial and Accounting Officer
and a Director
|
|
August
20, 2018
|
|
Geert
Kersten
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Peter R.
Young
|
|
Director
|
|
August
20, 2018
|
|
Peter R. Young
Ph.D
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Bruno
Baillavoine
|
|
Director
|
|
August
20, 2018
|
|
Bruno
Baillavoine
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Robert
Watson
|
|
Director
|
|
August
20, 2018
|
|
Robert
Watson
|
|
|
|
|
49